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1. You want to purchase one of the following milling machines. Machine AMachine B InitialCost $20,000 $30,000 Life 10 years 1

What are the approximate rates of return for machines A and B, respectively? a) 22.5% and 28.2% b) 23.9% and 27.0% c) 24.8% a

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Answer #1

The correct option is C.) 24.8% and 22.1%

for machin A. Pro -$20,000 & $2000 (/F it,10) +($9000) (Pia, chlo) - ($3svo) (Pla, iy, lo) $90,000 ($2000) CP/6...10+ ($5500)

for machin A. Pro -$20,000 & $2000 (/F it,10) +($9000) (Pia, chlo) - ($3svo) (Pla, iy, lo) $90,000 ($2000) CP/6...10+ ($5500) (PIA, 1X,l.) ($2000) (1 + i) -10 + ($ssod (Citijo -11 ilti'o By trial and error i= 24.8%. For machin B. P=0= - $30,000 + ($5000) (PIF, it, 10) + ($12,000) (PIA, i7, 10) - ($4500) (PIA, 1%, 10) $30,000 ($5000) (Plf, i%, (u) + ($7500) P/F (2110) - C$5000)(1+1)-° + $7500) ( cd zoo) / (1+i)lol) 1.1) By trial and error, i= 29.1%

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