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My new equipment is expected to cost $56,000. It will have a 7 year life and will have no salvage value at the end of

My new equipment is expected to cost $56,000. It will have a 7 year life and will have no salvage value at the end of the useful life. Expected cost savings will be $12,000 per year, compared to the current equipment. The discount rate is 20% and the PV of an ordinary annuity (7 years, 20%) = 3.6046.

* So, should the new equipment be purchased?

A. YES

B. NO

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