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A factory is considering investing $60 000 in a new machine. Management estimates that for the first two years, the cash inflows for the machine
A factory is considering investing $60 000 in a new machine. Management estimates that for the first two years, the cash inflows for the machine will equal the cash outflows. However, they expect net cash flows to be $20 000 in years 3 to 5 and $10 000 in years 6 to 9. If the cost of capital is J1=7.5%, should the factory buy the new machine ?
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