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A company is considering buying a new industrial air-conditioning machine to replace an older model machine. The machine will cost $650,000, and the expected salvage
A company is considering buying a new industrial air-conditioning machine to replace an older model machine. The machine will cost $650,000, and the expected salvage value after 4 years of use is $75,000. The cost of operating the machine is $12,000 per month, payable at the end of each month. The yearly interest rate is 3%. The machine is bought at time zero. Costs and income start at the end of the first month. Determine the required monthly income stream to make this investment worthwhile (breakeven). (This is a present value problem.)
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