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A production operation in a company is performed with equipment on - hand and labor costs of $ 7 5 , 0 0 0 per
A production operation in a company is performed with equipment onhand and labor costs of $ per year. The equipment is very lowmaintenance and should last indefinitely. A newequipment item for the same operation, also very lowmaintenance but requiring replacement every years, can be purchased for $ It will cut labor costs in half. The firms minimum attractive rateofreturn MARR is percent. a Should the company buy the new equipment. Explain why or why not? b What is the internal rate of return of the alternative whereby the new equipment is purchased? Show your work in your response.
A production operation in a company is performed with equipment onhand and labor costs of $ per year. The equipment is very lowmaintenance and should last indefinitely. A newequipment item for the same operation, also very lowmaintenance but requiring replacement every years, can be purchased for $ It will cut labor costs in half. The firms minimum attractive rateofreturn MARR is percent.
a Should the company buy the new equipment. Explain why or why not?
b What is the internal rate of return of the alternative whereby the new equipment is purchased? Show your work in your response.
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