Question: The Snethen Corporation has the opportunity to manufacture a new
The Snethen Corporation has the opportunity to manufacture a new chemical but will have to buy a new machine that costs $ 350,000 to produce the chemical. The net present value of the new ma-chine is $ 2,500. However, you have learned that in calculating the net present value, the cost of disposing of a waste product that the EPA has labeled mildly hazardous was excluded. Snethen disputes the EPA’s claim that the waste product is toxic. Therefore, Snethen management decided it could avoid the disposal cost by dumping the waste with other trash. Should Snethen buy the new machine? Why?
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