Which is the best alternative to buying a machine assuming an interest rate of 4% and a time span of 6 years. Compare using Present Values.
A: Buy new machines for $25k. They earn $5k per year and their maintenance costs are $125 per year. The salvage value after 6 years is $10k.
B: Buy rebuilt machines for $15k. They earn $3k per year and their maintenance costs are $350 per year. The salvage value after 6 years is $4k.