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The KANKULIA Imaging Company Is Considering the Purchase of New

Question 21

Multiple Choice

The KANKULIA Imaging Company is considering the purchase of new 3-D printer and is comparing two models: the HK Affinity A17 and the Roland ARM-10. The A17 bulldozer costs $14,999, with a projected annual operating and maintenance cost of $1,650 and a salvage value $2,500 after 4 years. The ARM-10 model costs $6,995, with a projected annual operating and maintenance cost of $3,600 and a salvage value of $500 after four years.
-Find the net present value of the HK Affinity A17 model if the cash flows are discounted annually at 9%. Find the net present value of the Roland ARM-10 model if the cash flows are discounted annually at 9%. Which model should be purchased based on these calculations?


A) HK Affinity A17
B) Roland ARM-10
C) Either one can be purchased.
D) Neither, since both will incur enormous loss.
E) Need additional information to decide

Correct Answer:

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