What is the present worth of rebuilding

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Reference no: EM131807468

The coal deposit that your firm is mining is becoming less profitable every year. Profit for the next year is estimated to be $2.2M, with an expected drop of $300K per year. The firm will stop mining when it is no longer profitable. To continue operating, the firm must rebuild its dragline, which will cost $3M immediately and have no salvage value. The interest rate is 12%. What is the present worth of rebuilding the dragline?

Reference no: EM131807468

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