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What maximum dollar amount company spend for the machine

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Question - Forge Company wants to purchase a new cutting machine for its sewing plant. The investment is expected to generate annual cash inflows of $220,000. The required rate of return is 12% and the current machine is expected to last for five years. What is the maximum dollar amount the company would be willing to spend for the machine, assuming its life is also five years? Income taxes are not considered.

a. $792,880

b. $1,397,660

c. $968,000

d. $921,800

Reference no: EM132474235

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