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An airline is deciding whether to purchase an additional airplane. It figures that the airplane will generate additional annual revenues of $150,000 for 10 years.

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An airline is deciding whether to purchase an additional airplane. It figures that the airplane will generate additional annual revenues of $150,000 for 10 years. The current cost of the airplane is $2 million. The airplane could be financed with a loan at an interest rate of 8 percent per year. Should the airplane be purchased? (13 points)

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