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Consider the case of Droplt Fast Parcel Company, working hard during the Corona virus lockdown. Dropit Fast is considering purchasing some new equipment to replace

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Consider the case of Droplt Fast Parcel Company, working hard during the Corona virus lockdown. Dropit Fast is considering purchasing some new equipment to replace existing equipment ( i.e. delivery car) that has a book value of zero, but market value of $15,000 The new equipment costs $90,000 and is expected to provide production savings and increased profits of $20,000 per year for the next ten years. The new equipment has an expected useful life of ten years, after which the estimated salvage value would be $10,000. Asuming straight-line depreciation, a 34% effective tax rate, and a cost of capital (i.e. discount rate) of 12%, should Droplt Fast replace the equipment/car

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