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Oman Inc. would like to buy $150,000 of new candy-making equipment. However, the company has a major loan maturing in three years and needs this
Oman Inc. would like to buy $150,000 of new candy-making equipment. However, the company has a major loan maturing in three years and needs this money back at that time to avoid bankruptcy. The candy-making equipment is expected to increase the cash flows by $50,000 in the first year, $100,000 in the second year, and $50,000 a year for the following three years. Should the company buy the equipment at this time? Why or why not? no; because the money will be recovered in three years yes; because the money will be recovered in one year yes; because the money will be recovered in two years no; because the money will be recovered in more than three years
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