Assume that the discount rate is 10% per year. Which machine P&G should buy ?
P&G must decide which of the two machines it should use to
produce its new line of products – new generation of
shampoo called Maxxhairr
Machine A costs $100,000, has a useful life of 4 years, and
generates after-tax cash flows of $40,000 per year
Machine B costs $65,000, has a useful life of 3 years, and
generates after-tax cash flows of $35,000 per year