Labco Scientific sells high-purity chemicals to universities, research laboratories, and pharmaceutical companies. The company wants to invest in new equipment that will reduce shipping costs by better matching the size of the completed products with the size of the shipping container. The new equipment is estimated to cost $450,000 to purchase and install. How much must Labco save each year for 3 years in order to justify the investment at an interest rate of 10% per year?

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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Labco Scientific sells high-purity chemicals to
universities, research laboratories, and pharmaceutical
companies. The company wants to invest
in new equipment that will reduce shipping costs
by better matching the size of the completed products
with the size of the shipping container. The
new equipment is estimated to cost $450,000 to
purchase and install. How much must Labco save
each year for 3 years in order to justify the investment
at an interest rate of 10% per year?

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