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You are thinking of building a new machine that will save you $ 4 , 0 0 0 in the first year. The machine will

You are thinking of building a new machine that will save you $

4, 000

in the first year. The machine will then begin to wear out so that the savings decline at a rate of

3 %

per year forever. What is the present value of the savings if the interest rate is

7 %

per

year?

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