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6- Businesses spend large amount of money on assets. To give decision where to spend money they evaluate different business investments. For evaluation they use
6- Businesses spend large amount of money on assets. To give decision where to spend money they evaluate different business investments. For evaluation they use capital budgeting models. Toy Production Company want to buy a new molding machine to save labor costs. Molding machine is 300.000-TL and its life time is 5 years. (Salvage value=0) Machine is depreciated with normal depreciation method according to lifetime. Machine will decrease labor cost 7.000-TL per month. (84.000-TL per year) Evaluate this project by using 4 methods of capital budgeting model. Income Tax rate 20%. Discount rate= 4% Evaluate if company should buy this molding machine or not with each method? Show your calculations and make logical explanations about your decisions
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