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A manufacturing company is planning to invest in new equipment to increase production capacity. The equipment costs $500,000 and is expected to have a useful
A manufacturing company is planning to invest in new equipment to increase production capacity. The equipment costs $500,000 and is expected to have a useful life of 5 years. The company estimates that the equipment will increase production by 20,000 units per year. If the variable cost per unit is $30 and the selling price per unit is $50, should the company invest in the new equipment if its required rate of return is 15%?
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