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Maxwell Company has the opportunity to acquire a new machine that would replace a present machine. The new machine would cost $90,000 and have a

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Maxwell Company has the opportunity to acquire a new machine that would replace a present machine. The new machine would cost $90,000 and have a five-year life. The estimated salvage value at the end of five years is $10,000. Cash operating costs of the now machine will be $100,000 per year. The present machine's remaining life is five years. Its present salvage value is $5,000. After five years, the salvage value will be zero. Cash operating costs of the old machine will be $130,000 per year. Maxwell's minimum rate of return is 20 percent. Also assume the new machine will need an overhaul at the end of the third year which will cost $1,000 Required: Determine the new machine's NPV and indicate whether or not this is an acceptable investment

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