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A proposed $2.5 M investment in new equipment at a 100 MG/y M&Ms factory will save the plant $800,000/y in energy costs. Assuming an annual
A proposed $2.5 M investment in new equipment at a 100 MG/y M&Ms factory will save the plant $800,000/y in energy costs. Assuming an annual interest rate of 5%/y (compounded annually), and an expected service life of 10 years for the new equipment, should the plant make this investment? Why or why not? Assume a salvage value of $0 at the end of the service life. [Note: MG/y is mega-grams per year.]
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