(Solution) - Machine X costs 50 000 and is forecast to generate an -(2025 Original AI-Free Solution)

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Machine X costs $50,000 and is forecast to generate an annual profit of $16,000 for five years. Machine Y, priced at $72,000, will produce the same annual profit for ten years. The trade-in value of X after five years is expected to be $10,000, and the resale value of Y after ten years is also thought to be $10,000. If either machine satisfies the firm?s requirements, which one should be selected? Use a required return of 14%.