If a machine costs $125,000 and has a life of 7 years with a salvage value of 5% of the original cost, should ABC Inc., install it if its MARR is 10%. The machine is estimated to provide a benefit of $4,700 per month to the company with a monthly cost of $2,500. No, the company should not go in for the machine. Yes, the company should go in for the machine. Either way it is okay, as the rate the company will make is equal to the MARR. Cannot be determined.
If a machine costs $125,000 and has a life of 7 years with a salvage value of 5% of the original cost, should ABC Inc., install it if its MARR is 10%. The machine is estimated to provide a benefit of $4,700 per month to the company with a monthly cost of $2,500. No, the company should not go in for the machine. Yes, the company should go in for the machine. Either way it is okay, as the rate the company will make is equal to the MARR. Cannot be determined.
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
Section: Chapter Questions
Problem 1PS
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Question
If a machine costs $125,000 and has a life of 7 years with a salvage value of 5% of the original cost, should ABC Inc., install it if its MARR is 10%. The machine is estimated to provide a benefit of $4,700 per month to the company with a monthly cost of $2,500.
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No, the company should not go in for the machine. |
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Yes, the company should go in for the machine. |
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Either way it is okay, as the rate the company will make is equal to the MARR. |
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Cannot be determined. |
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