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Question No.1 "A large food-processing corporation is considering using new technology to speed up and eliminate...

Question No.1

"A large food-processing corporation is considering using new technology to speed up and eliminate waste in the potato-peeling process. The system will save the company $1,082,000 per year in labor and materials. However, it will require an additional operating and maintenance (O&M) cost of $564,000. Annual income taxes will also increase by $162,000. The system is expected to have a 9 years service life and will have a salvage value of $310,000. If the company's MARR is 18%, what is the maximum amount that should be spent on purchasing the new technology?"

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