Question: You are considering purchasing a new injection-molding machine. This machine will have an estimated service life of 12 years with a negligible after-tax salvage value.

You are considering purchasing a new injection-molding machine. This machine will have an estimated service life of 12 years with a negligible after-tax salvage value. Its annual net after-tax operating cash flows are estimated to be $75,000. At a 15% required rate of return on investment, what would be the maximum amount that should be spent on purchasing the injection-molding machine?

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