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The management of London Corporation is considering the purchase of a new machine costing $750,000. The company's desired rate of return is 6%. The present
The management of London Corporation is considering the purchase of a new machine costing $750,000. The company's desired rate of return is 6%. The present value factors for $1 at compound interest of 6% for 1 through 5 years are 0.943, 0.890, 0.840, 0.792, and 0.747, respectively. In addition to this information, use the following data in determining the acceptability in this situation: Year 1 2. Income from Operations $37,500 37,500 37,500 37,500 37,500 Net Cash Flow $187,500 187,500 187,500 187,500 187,500 3 4 5 The present value Index for this investment is: a. 0.95 Ob. 1.00 Oc 1.25 Od 105
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