A paper mill is considering two types of pollution control

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A paper mill is considering two types of pollution control equipment.


Neutralization -

Initial Cost: $700,000

Annual Chemical Cost: 40,000

Salvage Value: 175,000

Useful Life, in years: 5


Precipitation -

Initial Cost: $500,000

Annual Chemical Cost: 110,000

Salvage Value: 125,000

Useful Life, in years: 5


a.) Construct a choice table for interest rates from 0% to 100%.

b.) The firm wants a 12% rate of return on any avoidable increments of investment. Which equipment should be purchased?

Reference no: EM13377339

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