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The manager of Manufacturing products is contemplating the purchase of new technology will cost RM 278 000 and has a useful life of five years.

The manager of Manufacturing products is contemplating the purchase of

new technology will cost RM 278 000 and has a useful life of five years. The

technology will yield (year-end) cost reductions of RM 45 000 in year 1, RM

52 000 in year 2, RM 58 000 in year 3, and RM 64 000 in years 4 and 5.

What is the present value of the cost savings of the technology if the interest

rate is 6 per cent? Should the manager purchase the technology?

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