At what cost of capital should newton purchase the crusher

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Reference no: EM131796660

Question: Newton Rock Co is considering the purchase of a new rock crusher. This new machine will allow Newton to receive new cash flows of $20,000 per year for the next four years. At the end of the fourth year, Newton will sell the crusher for $75,000. The purchase price of the new rock crusher is $120,000. At what cost of capital (required return) is Newton indifferent between purchasing the crusher and not purchasing the crusher? At what cost of capital should Newton purchase the crusher? Not purchase the crusher?

Reference no: EM131796660

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