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SECTION 5.2: Suppose a manufacturing company is considering upgrading their facilities to new more efficient...

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Accounting

SECTION 5.2: Suppose a manufacturing company is considering upgrading their facilities to new more efficient equipment. The equipment will cost $750,000 and is expected to save $125,000 per year.

a) (5 points) What is the payback period for this investment?

b) (5 points) Assuming a required rate of return of 6.5% what would the value of this investment be if the savings were expected to continue "forever."

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