A sawmill requires a new saw for cutting small-dimension logs. Model H, with a three-year service life, costs $119,000 and will generate an annual profit of $55,000. Model J, with a four-year service life, costs $160,000 and will return an annual profit of $58,000. Neither saw will have significant salvage value. If the mill's cost of capital is 13%, which model should be purchased?

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The Answer of A sawmill requires a new saw for cutting small-dimension logs. Model H, with a three-year service life, costs $119,000 and will generate an annual profit of $55,000. Model J, with a four-year service life, costs $160,000 and will return an annual profit of $58,000. Neither saw will have significant salvage value. If the mill's cost of capital is 13%, which model should be purchased?

A Sawmill Requires a New Saw for Cutting Small-Dimension Logs