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A manufacturing company is considering replacing a broken metal cutting machine. Several options have been proposed: a. The broken machine can be sold today for

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A manufacturing company is considering replacing a broken metal cutting machine. Several options have been proposed: a. The broken machine can be sold today for $2, 500. b. It can be overhauled completely for $8,000, after which it will produce $3,000 in annual cash flows over the next five years. The resale value of the asset at the end of five years is zero. c. It can be replaced for $20,000. The life of the replacement machine is five years, end it has an estimated salvage value of $3,000 at the end of five years. The anticipated operating cash flows for each year will be $6,000. If the firm's required rate of return is 15%, what should the company do

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