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Should the company buy the machine and why

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A company is deciding whether or not to buy a machine. The machine costs $45,000 and is expected to generate net cash flow for business as follows.

year 1                 $12,000

year 2                 $18,000

year 3                  $26,000

Question 1: the company's applicable interest rate is 12% on the machine. That is, the company will only invest in the machine if the cash flow it receives generates a return of 12% or more. Should the company buy the machine? Why or why not?

Reference no: EM132465133

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