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TNT IS CONSIDERING BUYING A NEW MACHINE FOR $628,000. THE MACHINE HAS AN EIGHT-YEAR LIFE. THE MACHINE WILL HELP TNT SAVE $102,000/YEAR. TNT WILL SELL
TNT IS CONSIDERING BUYING A NEW MACHINE FOR $628,000. THE MACHINE HAS AN EIGHT-YEAR LIFE. THE MACHINE WILL HELP TNT SAVE $102,000/YEAR. TNT WILL SELL AN OLD MACHINE FOR $50,000. THE SALE WILL TAKE PLACE ON THE SAME DAY THE NEW MACHINE IS BOUGHT. THE OLD MACHINE HAS A NBV = 26,000. TWO YEARS REMAIN ON THE OLD MACHINES DEPRECIABLE LIFE. THE NEW MACHINE WILL REQUIRE AN OVERHAUL IN YEAR 5 = $18,000. TNT HAS A 21% TAX RATE. WHAT IS THE NET PRESENT VALUE OF THE INVESTMENT USING A 6% DISCOUNT RATE?
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