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Should the santa cruz surfing company purchase the machine

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Question - The Santa Cruz Surfing Company is deciding whether to invest in a new machine. The new machine will increase cash flow by $53,000 annually. The machine has a 10-year life: whenever the machine is purchased, it will be obsolete 10 years from today. Currently, the machine costs $340,000, but the cost will go down by $25,000 a year, until it reaches $265,000, after which it will stay constant. If the required return in 9 percent, should the Santa Cruz Surfing Company purchase the machine, and if so, when? Show all steps to get to your answer.

Reference no: EM133156485

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