Q3. Your company's conveyor belt has broken and you have to decide whether to fix it or
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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) |
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