Business, 19.05.2021 18:50 rachanachannagiri

BSU Inc. wants to purchase a new machine for $45,600, excluding $1,200 of installation costs. The old machine was bought five years ago and had an expected economic life of 10 years without salvage value. This old machine now has a book value of $1,900, and BSU Inc. expects to sell it for that amount. The new machine would decrease operating costs by $10,000 each year of its economic life. The straight-line depreciation method would be used for the new machine, for a six-year period with no salvage value. a. Determine the cash payback period.
b. Determine the approximate internal rate of return.
c. Assuming the company has a required rate of return of 7%, determine whether the new machine should be purchased.

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BSU Inc. wants to purchase a new machine for $45,600, excluding $1,200 of installation costs. The ol...

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