Question

A machine that lasts four years has the following net cash outflows: $12,500 to purchase the machine and $7,500 for the annual year-end operating cost. At the end of four years, the machine is sold for $3,200; thus, the cash flow at year 4, C4, is only $4,300:
The cost of capital is 8 percent. What is the PV of the costs of operating a series of such machines in perpetuity?


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  • CreatedJune 17, 2015
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