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A company is considering replacing an old machine. The new machine costs $10,000 but, because...

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Finance

A company is considering replacing an old machine. The new machine costs $10,000 but, because of its increased efficiency, it will allow the company to reduce inventory on hand by $2,000 when the old machine is replaced. The old machine also has a $1,000 net salvage value. Calculate the Year 0 cash flow the company should use when evaluating the purchase of the new machine.

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