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2. Your company can borrow at 8%. You can upgrade your computer for $15,000. You estimate that this upgrade will increase company cash flow by
2. Your company can borrow at 8%. You can upgrade your computer for $15,000. You estimate that this upgrade will increase company cash flow by $7,000/year for the next three years. Calculate the NPV of this acquisition. If you decide that you should do this project (if the NPV is positive), show that you can make interest and principal payments with the increased cash flows generated by these new computers.
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