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What is the maximum discount rate

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Consider a new downhole pump that costs $275,000 and has a 5-year useful life. At the end of the 5 years, it can be sold for $80,000. The incremental revenue generated by the incremental production is generated by this pump is $70,000/year.

What is the maximum discount rate at which you would approve this project? Explain your reasoning.

Reference no: EM132796655

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