Question: Pekka Inc. has the option to purchase a new drilling machine for $50,000 today. The company expects a net cash flow of $13,000 per year

Pekka Inc. has the option to purchase a new drilling machine for $50,000 today. The company expects a net cash flow of $13,000 per year from using the machine, and the machine will last five years. According to the time value of money, the value today of $13,000 per year for five years is $46,862. Should the company purchase the new drilling machine?

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