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A vegetable producer is considering the purchase of a mechanical harvester and has collected the following information: Purchase price= $ 80,000, increase in annual cash
A vegetable producer is considering the purchase of a mechanical harvester and has collected the following information: Purchase price= $ 80,000, increase in annual cash flow before taxes= $20,000, useful life= 5 years.
a. compute the NPV of this investment. Assume the cost of capital (Discount Rate) is 10%.
b. Explain your results.
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