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The manager of Eskom is evaluating the purchase of a new equipment for solar power. The equipment costs R1 000 000 and will increase operating
The manager of Eskom is evaluating the purchase of a new equipment for solar power. The equipment costs R1 000 000 and will increase operating profits to R300 000 a year. The equipment has a life of 10 years after which there is no salvage value. For tax purposes, the company can depreciate the machine linearly. The cost of capital for Eskom is 12% and the marginal tax rate 30%. What is the Net Present Value? Explain each step
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