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Assume that a company is considering buying a piece of equipment that will save $5,000 per year in operating costs for nine years. Assuming the
Assume that a company is considering buying a piece of equipment that will save $5,000 per year in operating costs for nine years. Assuming the equipment has no salvage value and the companys discount rate is 12%, what is the maximum price the company should be willing to pay for the equipment? Hint: The maximum price should exactly equal the present value of the annual savings in operating costs.
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