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The Amarillo Corporation wants to purchase a new machine for its

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solution


Question

The Amarillo Corporation wants to purchase a new machine for its factory operations at a cost of $950,000.;The investment is expected to generate $350,000 in annual cash flows for a period of four years. The required rate;of return is 14%. The old machine can be sold now for $50,000. The new machine is expected to have zero value at;the end of the four-year period. The net present value of the investment in the new machine is closest to which of the;following amounts? Would the company want to purchase the new machine?

 

Paper#25312 | Written in 18-Jul-2015

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