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ABC Steel Co. is considering buying a new machine in order to increase its production capacity using new technology. Details about the new equipment are

ABC Steel Co. is considering buying a new machine in order to increase its production capacity using new technology. Details about the new equipment are below:

Purchase Cost $300,000

Savings offered by the new machine $62,500 per year

Life of the new machine 15 years

.-The corporate policy of ABC Steel Co. is to reject all proposal with a payback period of more than 7 years. Therefore, would ABC buy the new machine?

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