Fargo Corp. is considering the purchase of a new piece of equipment. The equipment costs...
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Fargo Corp. is considering the purchase of a new piece of equipment. The equipment costs $50,100, and will have a salvage value of $5,100 after nine years. Using the new piece of equipment will increase Fargos annual cash flows by $6,100. Fargo has a hurdle rate of 13%. a. How much is Fargos annual depreciation will on the equipment? b. What is Fargos projected annual increase in net income? c. What is the accounting rate of return for purchasing the new piece of equipment? (Round your answer to 2 decimal places.)d. Based on financial factors, should Fargo purchase the new equipment?
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