Would advise phj ltd to purchase the equipment

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Question - PHJ Ltd Company is considering purchasing a new tunnelling equipment costing $125 000 that will enable it to reduce its existing labour costs by $20 000 a year for 12 years. The company estimates that it will have to spend $3000 every two years overhauling the equipment. The required rate of return is 10% per annum. Assume all cash flows are made at the end of the year, would advise PHJ Ltd to purchase the equipment?

Reference no: EM132846251

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