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  3. 2. a firm is considering purchasing equipment that

2. A firm is considering purchasing equipment that will reduce cost by P520,000. The equipment...

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2. A firm is considering purchasing equipment that will reduce cost by P520,000. The equipment costs P340,000 and has a salvage value of P42,000 and a life of 8 years. The annual maintenance cost is P12,400. While not in use by the firm, the equipment can be rented to others to generate an income of P18,000 per year. If money can be invested for an 12 per cent return, is the firm justified in buying the equipment? Show complete solution

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