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Al-Amal Corporation has is considering the purchase of a special-purpose bottling machine for $62,000. It is expected to have a useful life of 4 years

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Al-Amal Corporation has is considering the purchase of a special-purpose bottling machine for $62,000. It is expected to have a useful life of 4 years with no terminal disposal value. Company management estimates the following cash savings in operating costs. Year Amount $22,000 26,000 28,000 24,000 Al-Amal Co. uses a required rate of return of 12% in its special capital budgeting decisions. Ignore income taxes in your analysis. Assume all cash flows occur at yeas-end except for initial investment amount Required: 1. Calculate the following for the special purpose bottling machine: a. Net present value. b. Payback period c. Discounted payback period d. Accrual accounting rate of return based on initial investment (straight line depreciation) 2. What factors should Al-Amal Co, consider in making the final decision whether to purchase this special purpose bottling machine

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