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The net-present-value method to analyze investment

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Reference no: EM131775738

Schille Company is considering a $5.4 million asset investment that has a four-year service life and a $400,000 salvage value. The investment is expected to produce annual savings in cash operating costs of $860,000 and will require a $250,000 overhaul in year 3. This investment will require $100,000 in work capital, which will be released at the end of the useful life. Schille uses a discount rate of 8%.

Required: use the net-present-value method to analyze this investment (please show work)

Reference no: EM131775738

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