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Thank you in advance! (a) Evaluate in the following ways whether to purchase the new equipment or overhaul the old equipment. (Hint: For the old
Thank you in advance!
(a) Evaluate in the following ways whether to purchase the new equipment or overhaul the old equipment. (Hint: For the old machine, the initial investment is the cost of the overhaul. For the new machine, subtract the salvage value of the old machine to determine the initial cost of the investment.) (1) Using the net present value method for buying new or keeping the old. (For calculation purposes, use 5 decimal places as displayed in the factor table provided. If the net present value is negative, use either a negative sign preceding the number eg -45 or parentheses eg (45). Round final answer to 0 decimal places, e.g. 5,275.) (3) Comparing the profitability index for each choice. (Round answers to 2 decimal places, e.g. 1.25) Waterways should equipment. Calculate the internal rate of return factor for the new and old blackhoes. (Round answers to 5 decimal places, e.g. 5.27647.) (4) Comparing the internal rate of return for each choice to the required 8% discount rate. Waterways should equipmentStep by Step Solution
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