Question: a company is considering buying a machine for $ 2 million that would reduce its annual net operating costs by $ 2 7 5 ,

a company is considering buying a machine for $2 million that would reduce its annual net operating costs by $275,000 over the next ten years. The machine would be worthless after ten years. The company applies a discount rate of 7 percent for this type of investment.
a. should the company purchase the machine?
b. what is your answer to question a if the annual reduction in costs rises by 7 percent per year?
c. What is the minimum reduction in annual net operating costs that would justify the investment?
d. What is the highest discount rate that would justify the investment?

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