Q3. Your company's conveyor belt has broken and you have to decide whether to fix it or buy a new one. You ordinarily buy a new belt every ten years, and you have had the current one for seven years. New conveyor belts cost $21,000. Your firm's discount rate for valuing cash flows is 8%.
What is the most you should be willing to pay to repair the current belt? Salvage values and taxes are ignored. (5 points)

Answer rating: 100% (QA)

Since the new conveyor belt would cost 21000 and t... View the full answer