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Santa Cruz Corp. wants to buy a new photocopier today for $9,000. Their current copier cost $16,000 7 years ago and requires annual maintenance of
Santa Cruz Corp. wants to buy a new photocopier today for $9,000. Their current copier cost $16,000 7 years ago and requires annual maintenance of $4,000, which is paid at the end of each year. Assume that both copiers are expected to last another 4 years will have zero salvage value. If their borrowing cost is 9% per year, what is the maximum annual maintenance (paid at the end of each year) that Santa Cruz can incur on the new copier to justify the purchase?
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