Company is considering purchasing new machine

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Reference no: EM131583199

A company is considering purchasing a new machine for $350,000. It will cost an additional $50,000 to do the site preparation. With the new machine installed, revenues will increase $100,000 per year. The machine will be used for five years, with an expected salvage value of $50,000. At an interest rate of 11%, would the purchase of the machine be justified? Use PW and AW. Do you get the same answer? What is the IRR? Is it a good investment based on IRR? (MARR is also 11%)

Reference no: EM131583199

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