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BrewHaus is looking to buy a new set of copper drums. These new additions will expand capacity, allowing BrewHaus to collect incremental cash flows of
BrewHaus is looking to buy a new set of copper drums. These new additions will expand capacity, allowing BrewHaus to collect incremental cash flows of $40,000 per year for the next four years. At the end of the fourth year, Newton will sell these drums for $55,000. The purchase price of the drums is $150,000. At what cost of capital (required return) is BrewHaus indifferent between purchasing and not purchasing the drums? At what cost of capital should BrewHaus make the purchase? Indifferent at 43.33%; purchase if cost of capital 24.68% Indifferent at 12.69%; purchase if cost of capital > 12.69% Indifferent at 13.75%; purchase if cost of capital
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