You are the accountant for a rock quarry. Your firm takes out a loan at 4% interest in order to purchase a new rock crusher and conveyor belt system. The system costs $20 million to purchase and install, but is expected to improve sales over the existing system you have by $2 million/year over 20 years. When evaluating if this is a good investment or not.

 What should you set discount rate, i, at for your calculations?

Answer rating: 100% (QA)

SOLUTION The discount rate i should be set by taking the opportunity cost of the loan into account T... View the full answer