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You are operating an old machine that will last two more years before it will be worthless. It costs $12,000 per year to operate. You
You are operating an old machine that will last two more years before it will be worthless. It costs $12,000 per year to operate. You can replace it now with a new machine, which costs $25,000 but is much more efficient ($8,000 per year in operating costs) and will last for five years. Should you replace it now or wait a year? The opportunity cost of capital is 6%
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