Should the bakery make the purchase

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Reference no: EM133326671

Case: A bakery in Athens, GA is considering the purchase of a $20,000 espresso machine. The coffee maker has an economic life of seven years and will be fully depreciated by the straight-line method. The machine will produce 10,000 cups of coffee per year, with each costing $3.00 to make (including labor costs) and priced at median price of $4.50. Assume that the discount rate is 18 percent and the tax rate is 21 percent.

Question: Should the bakery make the purchase?

Reference no: EM133326671

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