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A company would like to purchase a machine for $120,000 with a life of 7 years. They estimate the salvage value to be 5% of the initial machine cost. If other operating costs are estimated to be

A company would like to purchase a machine for $120,000 with a life of 7 years. They estimate the salvage value to be 5% of the initial machine cost. If other operating costs are estimated to be $20,000 per year. The interest rate the company uses to justify their investments is 8% per year compounded yearly. a. What is the capital recovery cost? b. What is the minimum amount of annual revenue ($? per year) that makes this investment an attractive option for the company?

Apr 12 2021 View more View Less

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