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Could you please show calculations? E24-6 BSU Inc. wants to purchase a new machine for $29,300, excluding $1,500 of instal- lation costs. The old machine
Could you please show calculations?
E24-6 BSU Inc. wants to purchase a new machine for $29,300, excluding $1,500 of instal- lation costs. The old machine was bought five years ago and had an expected ec life of 10 years without salvage value. This old machine now has a book value of $2,000, and BSU Inc. expects to sell it for that amount. The new machine would decrease operat- ing costs by $7.000 each year of its economic life. The straight-line depreciation method would be used for the new machine, for a six-year period with no salvage value Instructions (a) Determine the cash payback period. Determine the approximate internal rate of return. Assuming the company has a required rate of return of 10%, state your conclusion on whether the new machine should be purchased. (c) (CGA adapted)
Could you please show calculations?
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