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APPLY THE CONCEPTS: Present value of an ordinary annuity The controller at Ringer has determined that the company could save $4,000 per year in engineering

APPLY THE CONCEPTS: Present value of an ordinary annuity

The controller at Ringer has determined that the company could save $4,000 per year in engineering costs by purchasing a new machine. The new machine would last 10 years and provide the aforementioned annual monetary benefit throughout its entire life. Assuming the interest rate at which Ringer purchases this type of machinery is 10%, what is the maximum amount the company should pay for the machine?

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