Faleye Consulting is deciding which of two computer systems to purchase. It can purchase state-of-the-art equipment (Sys
Posted: Wed Jul 06, 2022 6:44 pm
Faleye Consulting is deciding which of two computer systems topurchase. It can purchase state-of-the-art equipment (System A) for$25,000, which will generate cash flows of $6,000 at the end ofeach of the next 6 years. Alternatively, the company can spend$13,000 for equipment that can be used for 3 years and willgenerate cash flows of $6,000 at the end of each year (System B).If the company’s WACC is 5% and both “projects” can be repeatedindefinitely, which system should be chosen, and what is its EAA?Do not round intermediate calculations. Round your answer to thenearest cent.