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Compute the present value of the annual cost savings

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Question - The management of Mashiah Corporation is considering the purchase of a machine that would cost $370,000, would last for 7 years, and would have no salvage value. The machine would reduce labor and other costs by $118,000 per year. The company requires a minimum pretax return of 11% on all investment projects.

Required - Compute the present value of the annual cost savings of $118,000?

a. $997,232

b. $826,000

c. $344,092

d. $556,016

Reference no: EM132533434

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