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Should brenda purchase the bobcat

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Reference no: EM132587233

Brenda Blair is considering buying a Bobcat for her construction business; the machine costs $250,000. Purchasing the Bobcat will provide incremental cash flows of $51,000 per year for six years. The salvage value at the end of five years is expected to be nil. Brenda's cost of capital is 14%.

Question a. Should Brenda purchase the Bobcat?

Question b. Compute the payback period, accounting rate of return base on initial investment, and NPV for the investment in making your decision.

Reference no: EM132587233

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