Calculate the value of purchasing the drill press

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Reference no: EM131308016

Show transcribed image text Jaguar Woodworking wants to purchase a new drill press for $81,000. The drill has a warranty that costs $450 for the first 4 years and $500 for the next 6 years. The new revenues from this drill press will be $10,000 annually. After year 10, the drill can be sold for a value of $28,000. In order to afford the drill, Jaguar takes out a loan for 80% of the value of the drill. The loan is paid back in annual payments over 5 years, starting in year 2 at the bank's interest rate of 20%. If Jaguar uses a MARR of 5%, calculate the value of purchasing the drill press. Should Jaguar purchase the drill?

Reference no: EM131308016

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