Question

By installing a new injection molding machine into its assembly line, plastic molding inc can decrease its production cost by an estimated 35000 the first year of installment, with an additional decrease of 4000 each year throughout the life of the equipment. It is estimated the new equipment will have a 10 years useful life and a salvage equal to 10% of its initial cost. Use a nominal interest rate of 15% to calculate how much plastic molding inc. can afford to pay for the new machine.

Answer #1

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