Management is considering the purchase of a new machine for a cost of $12,000. It is estimated
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Management is considering the purchase of a new machine for a cost of $12,000. It is estimated that the machine will generate positive net cash flows of $3,000 per year for five years and will have a disposal price at the end of that time of $1,000. Assuming an interest rate of 9 percent, determine if management should purchase the machine. Use Tables 3 and 4 in the appendix on future value and present value tables to determine the net present value of the new machine.Lo1
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