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teranine teranine
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A year ago

Cannula Vending Corporation is expanding operations and needs to purchase additional vending machines. There are currently two companies, Viscera, Incorporated and Gullet International, that produce and sell machines that will do the job. Information related to the specifications of each company's machine are as follows (Ignore income taxes.):

VisceraGullet
Purchase price per machine$ 18,000$ 24,000
Useful life of machine5years5years
Expected salvage value of machine in 5 years$ 2,000$ 5,000
Estimated annual operating cost per machine$ 4,000$ 3,000

Click here to view Exhibit 12B-1 and Exhibit 12B-2, to determine the appropriate discount factor(s) using the tables provided.

Cannula's discount rate is 18%. Cannula uses the straight-line method of depreciation. Using net present value analysis, which company's machine should Cannula purchase and what is the approximate difference between the net present values of the competing company’s machines?



▸ Gullet, $127

▸ Viscera, $1,562

▸ Viscera, $1,749

▸ Viscera, $3,438
Textbook 
Introduction to Managerial Accounting: Brewer Edition: 9e

Introduction to Managerial Accounting: Brewer Edition: 9e


Edition: 9th
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goodone14goodone14
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teranine Author
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Brilliant ツ
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