The new machine is capable of producing each year. The company is confident of selling the additional

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The new machine is capable of producing each year. The company is confident of selling the additional units by reducing its current price per unit of *200 by 10 per cent. It is also expected that for operating the new machine, a working capital investment of $25,000 would be required. Should the new machine be acquired? Assume tax rate of 50 per cent and required rate of return of 15 per cent. Further, assume that depreciation can be charged on straight-line basis for computing tax, and ordinary tax is applicable on the gain or loss from the sale of asset.

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