Question

The Perez Company has the opportunity to invest in one of two mutually exdusive machines realizes after-tax infows of $4.5 million per year for 4 years. After 4 that will produce a product it will need for the foreseeable future. Machine A costs $8 million but o years, the machine must be roplaced. Machine B costs $17 million and realzes after-tax infhows of $4.5 mition per year for cost of capital is years, after which it must be replaced. Assume that machine prices are not expected to rise because inflation will be offiset by cheaper components used in the machines. The For example, an answer of $1.2 million should be entered as 1.2, not 1,200,000. Round your answer to two decimal 8.68 0 million b. What is the equlvalent anual annuity for each machine? Enter your answer in millions. For example, an answer of $1.2 milion should be entered as 1.2, not 1,200,000. Round your answers to two decimal places Machine B 3.54million

Answer 1

I am only answering part b) as part a) is already solved by you. If you want solution to Part a) mention in comments section.

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