Which copier should the company choose

Reference no: EM13302470

People Products Inc must choose between 2 copiers, the XX40 or the RH45. The XX40 costs $1500 and will last for 3 years. The copier will require real after-tax costs of $120 per year after all relevant expenses. The RH45 costs $2,300 and will last 5 years. The real after-tax cost for the RH45 will be $150 per year. All cash flows occur at the end of the year. The inflation rate is expected to be 5% per year and the nominal discount rate is 14%. Which copier should the company choose?

Reference no: EM13302470

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