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Old machine: New machine: Costs $ 9 , 0 0 0 now Annual end - of - year maintenance cost = $ 1 , 0
Old machine:
New machine:
Costs $ now
Annual endofyear
maintenance cost $
Lasts for years
Salvage value $
Cost of capital
No taxes
Should the firm replace the old
machine with the new machine
now or in one year?
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