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April 18, 2014

Homework Help: Finance

Posted by Mary on Tuesday, August 31, 2010 at 10:04pm.

A company wants to buy a labor-saving piece of equipment. Using the NPV method of capital budgeting, determine the proposal's appropriateness and economic viability with the following information:

Labor content is 12% of sales, which are annually $10 million.

The new equipment will save 20% of labor annually.

The new equipment will last 5 years.

The new equipment will cost $200,000.

The discount rate is 10%

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