Kizspy | Question: 16
(Choose 1 answer)
Burt's Pizzas is considering whether to purchase an oven. Burt's calculates that its current oven generates
$4,000 of cash flow per year. A new oven would cost $15,000 and would provide cash flow of $6,000 per year
for six years. What is the equivalent annual cash flow for the new oven (round to the nearest dollar), and
should Burt's purchase the new oven? Assume the cost of capital for Burt's is 12 percent.
A. $2,352, do not purchase the oven
B. $6,000, purchase the oven
C. $9,668, purchase the oven
D. $24,668, purchase the oven
