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MacDonald's is trying to determine whether it should open stand - alone ice cream stores. This means that the company would have to purchase a

MacDonald's is trying to determine whether it should open stand-alone ice cream stores. This means that the company would have to purchase a new freezer, which will be depreciated using the 7-year MACRS schedule. The manager would like toknow what is the highest price that can be paid for the freezer.
It is estimated that during the first year, MacDonald's will sell 5,000 ice cream cones at a price of $3. After the first year, the number of cups sold will increase by 10% per year. At the same time, the price of the ice cream cones will increase by 5% per year. The cost of goods sold is expected to be 30% of sales, and the selling expenses will be 10% of sales.
The project is expected to last 5 years. At t =5, the manager believes that the gelato machine can be sold for $3,000. The company's tax rate is 35% and the required return is 15%. Use Goal Seek to find the maximum price MacDonald's can pay for the new freezer.

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