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Claire, the owner of a small manufacturing company, intends to purchase a 3D printer. The 3D printer will be paid in three instalments: 3,000 upfront,
Claire, the owner of a small manufacturing company, intends to purchase a 3D printer. The 3D printer will be paid in three instalments: 3,000 upfront, 2,000 at the end of the first year and 1,000 at the end of the second year. Claire predicts that the 3D printer will generate 5,000 revenues per year, while 3,000 per year will be spent for expenses. She anticipates to sell the 3D printer at the end of the 4th year for 2,000. Claire expects a discount rate of 1.5%. (a) Show, with the use of appropriate calculations, whether the 3D printer project will generate a profit. Comment on your solution. [7 marks] Comment on the assumptions that Claire has made to assess the financial success of her project. [3 marks) (b)
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