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Blue Bell can invest in a new machine for their production floor that will reduce their expenses by 15%. It will cost $350 million today
Blue Bell can invest in a new machine for their production floor that will reduce their expenses by 15%. It will cost $350 million today to buy the machine. Their expenses for the life of the machine are expected to be $600 million a year and the machine will last five years. If their discount rate is 12%, what is the NPV? If their discount rate is 15%, what is the NPV? What is the breakeven discount rate (gives an NPV=0)?
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