You are looking to replace an old machine X with a new machine Y.
The two machines,X and Y,which perform the same functions,have the following costs and lives.
PV Costs Life
Machine X $10,000 5
Machine Y $11,500 7
Which machine would you choose? Assume an opportunity cost of capital of 15%.

Question

Quizplus · Accepted Answer

Equivalent annual NPV_X= 10,000/3.3522 = 2,983.12 Equivalent annual NPV_Y = 11,500/4.1604 = 2.764.16

You Are Looking to Replace an Old Machine X with a New