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  3. 3. (4 points) to purchase a new piece of equipment

3. (4 points) To purchase a new piece of equipment, a company must spend $4,800...

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Accounting

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3. (4 points) To purchase a new piece of equipment, a company must spend $4,800 in time 0. By using the new equipment, the company estimates that it will generate $1,000 in profit each year. The annual operating and maintenance (O&M) costs are projected to be $550 per year. At the end of its useful life in 8 years, the company expects that it can sell the piece of equipment for $3,500 (salvage value). The minimum attractive rate of return (MARR) that the company has established for the purchase is 9%. Use the benefit/cost (B/C) method to determine whether purchasing the equipment is economically justified. Base the B/C ratio on the present worth of the benefits and costs

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