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2. A firm is considering purchasing a machine that costs $55,000. It will be used for six years, and the salvage value at that time
2. A firm is considering purchasing a machine that costs $55,000. It will be used for six years, and the salvage value at that time is expected to be zero. The machine will save $25,000 per year in labor, but it will incur $7,000 operating and maintenance costs each year. The machine will be depreciated according to five-year MACRS. The firm's tax rate is 40% and its after-tax MARR is 15%. Should the machine be bought? 2. A firm is considering purchasing a machine that costs $55,000. It will be used for six years, and the salvage value at that time is expected to be zero. The machine will save $25,000 per year in labor, but it will incur $7,000 operating and maintenance costs each year. The machine will be depreciated according to five-year MACRS. The firm's tax rate is 40% and its after-tax MARR is 15%. Should the machine be bought
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