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Acme Company is considering purchasing a new machine. The initial investment is $25,000 and the net benefits (savings realized minus operating costs) are as follows:

Acme Company is considering purchasing a new machine. The initial investment is $25,000 and the net benefits (savings realized minus operating costs) are as follows:

End of Year : Net Cash Flow

0 : -$25,000

1 : -$1,500

2 : $1,500

3 : $4,500

4 : $7,500

5 : $10,500

6 : $13,500

You have been asked by the president of the company to evaluate the economic merit of the acquisition. The companys MARR is 12%. What is the present worth of this project?

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