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Quiz1_Spring09 - tious it expects a real MARR of 12 per...

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CHEE 5369/6369 Quiz # 1 (Closed Bo - ok) Tuesday, January 27, 2009 Abbott Mining Systems wants to determine whether it should buy now or buy later for upgrading apiece of equipment used in deep mining operations. If the company selects plan N, the equipment will be purchased now for $200,000. However, if the company selects plan L, the purchase will be deferred for 3years when the cost is expected to rise rapidly to $340,000.
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Unformatted text preview: tious; it expects a real MARR of 12% per year. The inflation rate in the coun-try has averaged 6.75 % per year. From only an economic perspective, determine whether the company should purchase now or later (a) when inflation is not considered and (b) when inflation is co r lSiCkred. : 5 ~ I O 00 _ I-r ; : )-~ ~ l q_n Y-I ' ) ' 1 , / 1-l . L-X ?-:: ~?-< > I D 0 0 1 ) 1 ~ , h o f 5...
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