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Your company is starting a new product line that will require buying a new piece of manufacturing equipment in Year 0 for $20,000. You expect the profit to be $4.000 in Year 1 and to grow by 5% per year each year after that. a) What is the simple payback period? b) Given an interest rate of 8%, what is the discounted payback period? c) If the company looks for a discounted payback period of 6 years or less, would they consider this a good investment?
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