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Rosemary Co estimates that it can save $40,000 per year in cash operating costs for the next four years if it buys a new machine
Rosemary Co estimates that it can save $40,000 per year in cash operating costs for the next four years if it buys a new machine that costs $120,000. The machine is expected to have a four-year life and a zero salvage value. Rosemary depreciates all of its assets using straight-line depreciation. Rosemary's income tax rate is 50% and its cost of capital is 8%. The net present value (NPV) associated with purchasing the new machine is closest to: A. ($4,080) B. $115,920 C. ($15,000) D. $0 E. None of the above
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