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Pigs-R-Us Example 3 (Rate of Return Methods)

Pigs-R-Us Example 3 (Rate of Return Methods) - The machine...

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Pigs-R-Us Example 3 (Rate of Return Methods) Pigs-R-Us is trying to decide whether or not to automate their meat packing process. The machine costs $200,000, has a useful life of 10 years and a salvage value of $10,000. It will require a $60,000 overhaul after 5 years of use.
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Unformatted text preview: The machine costs $9000 per year to operate and maintain, but it will save the company $50,000 per year in labor costs. Pigs-R-Us has asked you to evaluate the economics of this purchase and tell them what do to. If their MARR is 14%, what would you recommend?...
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