Should you buy the machine

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Reference no: EM131936915

You can invest in a Machine that costs $800,000.You can expect revenues net of any expense, except maintenance costs, of $100,000 at the end of each year for years.

You will subcontract the maintenance costs at a rate of $15,000 per year to paid at the beginning of each year.

You can expect to act $250,000 for selling the machine at the end of the sixth year.

All these revenues and costs are after tax as is the 8% cost of capital. Should you buy the machine?

Reference no: EM131936915

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