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Alpha Company is planning to invest in a new machine which will result in the (a) following Annual revenue of $10,000 in the first year
Alpha Company is planning to invest in a new machine which will result in the (a) following Annual revenue of $10,000 in the first year (Year 1) and increasing $5,000 per year from Year 2 to Year 9. From Year 10 onwards, annual revenue will remain constant at $52,000 for an infinite period The machine needs to be serviced every 10 years. The cost for each service is expected to remain unchanged at $40,000. The MARR is 10%. Alpha Company is expecting a present worth of $100,000 for this investment Employ present worth analysis to obtain the price at which Alpha Company can purchase the new machine. (13 marks)
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