A company is considering replacing an old piece of industrial equipment to reduce operating and maintenance cost. A new equipment is quoted at 215.000 dolars. After 12 years, the machine would have no value, but it would save as much as 35.000 dolars in operating and maintenance cost. If the firm's interest rate is 9%, is it worth buying the new equipment

Essentials Of Investments
11th Edition
ISBN:9781260013924
Author:Bodie, Zvi, Kane, Alex, MARCUS, Alan J.
Publisher:Bodie, Zvi, Kane, Alex, MARCUS, Alan J.
Chapter1: Investments: Background And Issues
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A company is considering replacing an old piece of industrial equipment to reduce operating and maintenance cost. A new equipment is quoted at 215.000 dolars. After 12 years, the machine would have no value, but it would save as much as 35.000 dolars in operating and maintenance cost. If the firm's interest rate is 9%, is it worth buying the new equipment

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