Murdock Company, a not-for-profit enterprise, is contemplating the acquisition of a new copier on December 30, 2009. The copier costs $ 42,600, has an estimated life of six years, and is expected to save paper and time, as well as reduce repair cost. The cash Murdock expects to save as a result of buying the copier over the next six years is as follows:
What is the maximum price Murdock should pay for the copier if its hurdle rate is 15 percent? Calculate the net present value of the new copier using a 12 percent hurdle rate. Should Murdock Company buy the copier? Why?
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