A small manufacturing company expects to have to replace its aging production line in five...
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A small manufacturing company expects to have to replace its aging production line in five years with new equipment. The current equipment has operating costs which are expected to be $5,000 this year $8,000 next year, with costs increasing by $1,000 per year through year five The equipment will have a salvage value of S30,000 a the end of year five The new equipment is expected to cost $150,000 and the company uses an interest rate of 16% per year compounded quarterly on its rivestments The operating cost in year four will be $7,000 $8,000 S9,000 S10,000
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