A chemical company is considering buying a magic fan for its plant. The magic fan is expected

Question:

A chemical company is considering buying a magic fan for its plant. The magic fan is expected to work forever and help cool the machines in the plant and, hence, reduce their maintenance costs by $4,000 per year. The cost of the fan is $30,000. The appropriate is 10 percent and the marginal tax rate is 40 percent. Should the company buy the magic fan?

Discount Rate
Depending upon the context, the discount rate has two different definitions and usages. First, the discount rate refers to the interest rate charged to the commercial banks and other financial institutions for the loans they take from the Federal...