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Category > Accounting Posted 31 May 2017 My Price 5.00

Comparing Mutually Exclusive Projects

Comparing Mutually Exclusive Projects Vandalay Industries is considering the purchase of a new machine for the production of latex. Machine A costs $3,900,000 and will last for six years. Variable costs are 35 percent of sales, and fixed costs are $2,100,000 per year. Machine B costs $5,400,000 and will last for nine years. Variable costs for this machine are 30 percent and fixed costs are $2,400,000 per year. The sales for each machine will be $12 million per year. The required return is 10 percent and the tax rate is 35 percent. Both machines will be depreciated on a straight-line basis. If the company plans to replace the machine when it wears out on a perpetual basis, which machine should you choose?

 

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Alpha Geek
(8)
Status NEW Posted 31 May 2017 06:05 AM My Price 5.00

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file 1496212103-Answer.docx preview (69 words )
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