Expand production capacity

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A manufacturing company is purchasing a new machine for $380,000 to expand its production capacity. It will cost an additional $30,000 to do the site preparation. With the new machine installed, the company expects to increase its revenue by $91,000 per year. The machine will be used for four years, with an expected salvage value of $78,000. At an interest rate of 14%, would the purchase of the machine be justified?

Reference no: EM13881015

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