Question: 16. Agfa p.l.c. is considering purchasing for Rs 50 thousand a machine that will reduce cash outlays by Rs 10,500 each year for the next

16. Agfa p.l.c. is considering purchasing for Rs 50 thousand a machine that will reduce cash outlays by Rs 10,500 each year for the next seven years. At the end of the 7-year period, the machine will be worthless.

What rate of discount will equate the purchase price of the machine and the cost savings for the 7 years? If the required rate of return is 12%, should the company buy the machine?

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