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The management of Nebraska Corporation is considering the purchase of a new machine costing $490,000. The company's desired rate of return is 10%. The present
The management of Nebraska Corporation is considering the purchase of a new machine costing $490,000. The company's desired rate of return is 10%. The present value factors for $1 at compound interest of 1000 for Years 1 through 5 are 0.909, 0.826, 0.751, 0.683, and 0.621, respectively. In addition to the foregoing information, use the following data in determining the acceptability: Income from Operations $100,000 40,000 40,000 10,000 10,000 Net Cash Year Flow $180,000 120,000 100,000 90,000 120,000 4 The average rate of return for this investment is a, 1090 b. 1690 c. 58% d. 18%
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