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A corporation is considering purchasing a machine that costs $500,000. The machine has a lifespan of 6 years with no salvage value. The machine is

A corporation is considering purchasing a machine that costs $500,000. The machine has a lifespan of 6 years with no salvage value. The machine is expected to generate annual revenues of $120,000 with annual operating costs (excluding depreciation) of $20,000. The company’s tax rate is 30%. The discount rates and cumulative factors for 6 years are as follows:

Discount Rate

Cumulative Factor

10%

4.355

12%

4.111

14%

3.889

16%


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