Question
You are the vice president of Automated Products. Your manager is proposing that the company purchase a new machine that will cost RM300,000 and has
You are the vice president of Automated Products. Your manager is proposing that the company purchase a new machine that will cost RM300,000 and has a useful life of 5 years. The machine will yield cost reductions to the company of RM50,000 in year 1, RM60,000 in year 2, RM75,000 in year 3, and RM90,000 in year 4 and 5. What is the present value (PV) of the cost savings of the machine if interest rate (r ) is 8%?
Should you agree or disagree with proposal?
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Economics
Authors: Roger A. Arnold
11th edition
1133561675, 978-1133561675
