A new machine can be purchased for $400,000. It needs to be serviced on a regular basis at a cost of $25,000 per year. The cost to remove the machine after ten years is $50,000. The machine is expected to save the company $75,000 per year over its life. Should the new machine be purchased if money earns 8.5% compounded annually?

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The Answer of A new machine can be purchased for $400,000. It needs to be serviced on a regular basis at a cost of $25,000 per year. The cost to remove the machine after ten years is $50,000. The machine is expected to save the company $75,000 per year over its life. Should the new machine be purchased if money earns 8.5% compounded annually?

A New Machine Can Be Purchased for $400,000