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Watertown Paper Corporation is considering adding another machine for the manufacture of corrugated cardboard. The machine costs $900,000. It would have an estimated life of
Watertown Paper Corporation is considering adding another machine for the manufacture of corrugated cardboard. The machine costs $900,000. It would have an estimated life of 6 years and no salvage value. The company estimates that annual cash inflows would increase by $400,000 and that annual cash outflows would increase by $190,000. Management has a required rate of return of 9%. Please calculate the net present value of this project and discuss whether it should be accepted.
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