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Trudy's Tire Company needs to overhaul its auto lift system or buy a new one. The data is presented below: Trudy's uses straight line depreciation
Trudy's Tire Company needs to overhaul its auto lift system or buy a new one. The data is presented below: Trudy's uses straight line depreciation to depreciate equipment. The current machine has 5 years remaining on its useful life and the new machine has a 5-year useful life. The company is subject to a 30% income tax rate. Trudy's has a required rate of return of15%. Required: 1. Prepare a net present value analysis to compare the two options. 2. Which alternative would you recommend to Trudy? Why
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