Sensotech, Inc., a maker of microelectromechanical systems, believes it can reduce product recalls by 10% if it

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Sensotech, Inc., a maker of microelectromechanical systems, believes it can reduce product recalls by 10% if it purchases new software for detecting faulty parts at a cost of $225,000. The minimum attractive rate of return is 15% per year.

a. How much does the company have to save each year for 4 years to recover its investment?

b. What was the cost of recalls per year before the software was purchased if the company exactly recovered its investment in 4 years from the 10% reduction?

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