Operating and maintenance costs

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Installing an automated production system costing $278,000 is initially expected to save Zia Corporation $52,000 in expenses annually. If the system needs $5000 in operating and maintenance costs each year and has a salvage value of $25,000 at Year 10, what is the IRR of this system? If the company wants to earn at least 12% on all investments, should this system be purchased? Contributed by Paul R. McCright, University of South Florida.

Reference no: EM131806429

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