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Manufacturers, Inc. is planning to buy a new piece of equipment to add to its production line. The firm has determined that the new production
Manufacturers, Inc. is planning to buy a new piece of equipment to add to its production line. The firm has determined that the new production line will result in additional net income of $34,000 each month. It has also calculated that its net cash flow will increase by $31,000 each month.
When making the decision to invest in the new production line, which amount is more meaningful: additional net income or additional net cash flow? Why?
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