Problem: An office prints 200,000 pages per year. The Dell brand printer costs $1100 and will produce a total of 600,000 copies before it wears out (3 year life). The Cannon brand machine costs $1,800 and will produce 1,000,000 copies in its 5 year life. Maintenance and material costs are $.05 a page for the Dell machine and $.03 with Cannon machine. The Dell machine has a salvage value of $150 and the Cannon machine will have a salvage value of $225. The required return is 8 percent a year. Which machine should the company acquire? Show numbers and assume year-end cash flows for simplicity.
Net present value for Dell copier____
Equivalent annuity for Dell copier____
Net present value for Cannon copier____
Equivalent annuity for Cannon copier____
Which copier should be chosen ____