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Business, 07.05.2021 15:30 bayloann3928

BSU Inc, wants to purchase a new machine for $48, 200, excluding $1, 500 of installation costs. The old machine was bought five years ago and had an expected economic life of 10 years without salvage value. This old machine now has a book value of $2,000, and BSU Inc. expects to sell it for that amount. The new machine would decrease operating costs by $10,000 each year of its economic life. The straight-line depreciation method would be used for the new machine, for a six-year period with no salvage value. a) Determine the cash payback period.
b) Determine the approximate internal rate of return.
c) Assuming the company has a required rate of return of 5%, determine whether the new machine should be purchased.

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BSU Inc, wants to purchase a new machine for $48, 200, excluding $1, 500 of installation costs. The...
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