Costopoulos Company Ltd is considering the purchase of equipment that will produce net after-tax cash savings over the useful life of the equipment of 5 years as follows.

Required

(a) What is the maximum price the business should pay for the equipment, assuming a discount rate of 8%?

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Year 1 2 3 After-tax savings $61 400 51 000 57 100 47 300 4 5 53 300