Determining the company required rate of return

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Zainab Plc, a civil engineering company is contemplating the replacement of one of its machines bought two years ago, with a modern one. the existing machine can serve for another 5 years for which it will be scrapped for $1,200,000. If the existing machine is sold now, it will fetch years useful life at the end of which it will be sold at $800,000,000. The new machine will reduce the company's cost by $3,600,000 annually. Should the new machine be purchased if the company's required rate of return is 14%?

Reference no: EM132436128

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