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New Mex Inc is contemplating the purchase of a machine capable of performing some operations that are now performed manually. The machine will last for
New Mex Inc is contemplating the purchase of a machine capable of performing some operations that are now performed manually. The machine will last for five years. At the end of the five year period, the machine will have a zero scrap value. Use of the machine will reduce labor costs by $25,000 per year (cash basis). The company's required rate of return (discount rate) is 12% on all investments projects. Ignore taxes. Which amount below is closest to what the company is willing to pay for the new equipment? A. $90,125 B. $125,000 C. $290,675 D. $450,625 E. None of the above
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