Which machine should you purchase

Reference no: EM13292801

Red Rose Florists is considering purchasing two irrigation machines. One costs $400,000, lasts 5 years and generates pretax cost savings of $70,000. The other costs $320,000, also lasts 5 years, and generates pretax cost savings of $60,000. Both are depreciated straight line. The tax rate is 40%. Neither machine will be used after the 5 years. Which machine should you purchase, using a required return of 15%?

Reference no: EM13292801

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