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Which machine should mercil buy and why

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Reference no: EM13340827

Mercil Corporation is going to buy one of the following two machines. Each machine meets the specifications for a particular task in the company. Mercil's tax rate is 30 percent and its cost of capital is 15 percent.

-Which machine should Mercil buy and why?

Machine A: Costs $90,000 to acquire and $12,000 cash a year to operate in each year of its 10-year life. Annual depreciation is $9,000, and the machine has no salvage value.

Machine B: Costs $50,000 to acquire and $24,600 a year to operate in each year of its 10-year life. Annual depreciation is $5,000, and the machine has no salvage value.

Reference no: EM13340827

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