Question
GreenCut Lawnmowers is thinking about buying a new piece of machinery that costs $185,000. After its estimated useful life of six years, the machine will
GreenCut Lawnmowers is thinking about buying a new piece of machinery that costs $185,000. After its estimated useful life of six years, the machine will have no salvage value. GreenCuts management believes the new machine will provide net annual cash flows of $38,500. Management also thinks the machine will save the firm extra money by reducing its amount of manufacturing errors. If the discount rate is 9%, how much must the reduction in manufacturing errors be worth in order for the project to be acceptable?
about $2,740 per year
about $10,250 per year
about $3,690 per year
about $8,720 per year
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Cornerstones of Cost Management
Authors: Don R. Hansen, Maryanne M. Mowen
2nd edition
1111824401, 978-1111824402
