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Purchase of a new piece of equipment

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Company X is considering the purchase of a new piece of equipment to be used in their manufacturing plant. The equipment will cost $6,000 and will increase annual cash inflow by $2,200. The useful life of the equipment is 6 years. After 6 years it will have no salvage value. The management wants a 20% return on all its investments. Calculate the NPV and should company X purchase the equipment according to the NPV?

Reference no: EM131066526

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