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Your firm is considering buying a new machine that costs $800. Over the next 8 years of the life of the machine, it generates annual
Your firm is considering buying a new machine that costs $800. Over the next 8 years of the life of the machine, it generates annual sales of $1000. The annual COGS is $400 per year, and SG&A expenses are $300 annually. Depreciation is straight line, salvage value is zero, and the firm's tax rate is 40%. The firm's discount rate for similar projects is 15%. Should the firm buy the machine???What is the decision if the machine is sold at the end of 7 years for an estimated value of $400?? What is the decision if the machine is sold at the end of 7 years for $50
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