You can invest in a machine that costs $500,000. You can expect revenues net of any expense,
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You can invest in a machine that costs $500,000. You can expect revenues net of any expense, except maintenance costs, of $150,000 at the end of each year for five years. You will subcontract the maintenance costs at a rate of $20,000 a year, to be paid at the beginning of each year. You expect to get $100,000 from selling the machine at the end of the fifth year. All these revenues and costs are after tax, as is the 10 percent cost of capital. Should you buy the machine?
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Finance for Executives Managing for Value Creation
ISBN: 978-0538751346
4th edition
Authors: Gabriel Hawawini, Claude Viallet
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