Purchase new lawn-mowing equipment

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The state highway department may purchase new lawn-mowing equipment. The best alternative requires an initial investment of $90,000. Each year, the new equipment is expected to save the state $19,500. The equipment will be used for 6 years and has little or no expected salvage value. Using benefit/cost analysis and an interest rate of 10%, should the equipment be purchased? (Answer: B/C = .944; no)

Reference no: EM131809658

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