Calculate the net present value with a discount rate

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The owner of the supplier firm has indicated that he would be willing to sell his business for $500,000. I expected this "vertical integration" of the company to result in reduced material costs totaling $75,000 annually for the next 15 years. I do not expect these savings to continue after 15 years. Calculate the Net Present Value with a discount rate of 10% and explain if this is a good investment alternative.

Reference no: EM13328931

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