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5). I have the opportunity to invest in a new mechanical device that costs $5000. This machine will provide me cost savings of $750, and
5). I have the opportunity to invest in a new mechanical device that costs $5000. This machine will provide me cost savings of $750, and I anticipate the price to fall by 15% each year.
a) If my cost of capital is 10%, is it more optimal to buy this device now, or wait? If I wait, when is the optimal time?
b) Consider the previous question, except my cost of capital is 13%.
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