Question
Mailbox Corp. uses a production machine that costs $13,400 to maintain and will last for 1...
Mailbox Corp. uses a production machine that costs $13,400 to maintain and will last for 1 more year. A production machine is essential to Mailbox Corp.’s ongoing business. Mailbox Corp. can buy a new production machine for $50,000 that can last the next 6 years and should require maintenance costs of $3,400 a year.
a. If the discount rate is 7% APR, compounded annually, what is the NPV of acquiring a new production machine?
b. If the discount rate is 7% APR, compounded annually, what is the EAC of acquiring a new production machine?
c. If the discount rate is 7% APR, compounded annually, should Mailbox replace the production machine?
Homework Answers
Answer #1
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