Replacement decision, Replacement Decision. You are

Replacement decision

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Reference no: EM131998058

Replacement Decision. You are operating an old machine that is expected to produce a cash inflow of $5,000 in each of the next 3 years before it fails. You can replace it now with a new machine that costs $20,000 but is much more efficient and will provide a cash flow of $10,000 a year for 4 years. Should you replace your equipment now? The discount rate is 15%.

Reference no: EM131998058

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