Choices to replace with two alternatives best option

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Choices to replace with two alternatives Choose the best option to replace

Station CJXT is considering the replacement of its old, fully depreciated sound mixer. Two new models are available. Mixer X has a cost of $648,000, a five-year expected life, and after-tax cash flow of savings of $204,600 per year. Mixer Y has a cost of $1,035,000, a 10-year life, and after-tax cash flow of $250,000 per year. No new technological developments are expected. The cost of capital is 12 percent. Should CJXT replace the old mixer with X or Y?

Reference no: EM1312813

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