Crash Realty must choose between two copiers, the 4GX and the 5GQ.
The 4GX costs $2000 and will last for three years. The copier will require a real aftertax
cost of $120 per year including all relevant expenses. The 5GQ costs $3000 and will last
five years; its real aftertax cost will be $150 per year. All cash flows occur at the end of
the year. The inflation rate is expected to be 5 percent per year, and the nominal discount
rate is 12 percent. Which copier should the company choose?