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IBP Inc. is considering establishing a new machine to automate a meatpacking process. The machine will save $50,000 in labor annually. The machine can be
IBP Inc. is considering establishing a new machine to automate a meatpacking process. The machine will save $50,000 in labor annually. The machine can be purchased for $200,000 today and will be used for 10 years. It has a salvage value of $10,000 at the end of its useful life. The new machine will require an annual maintenance cost of $9,000. The corporation has a minimum rate of return of 10%. Do you recommend automating the process?
Can you show the formula and work explaining why or why not?
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