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A company wants to invest into a new production process and is trying to determine the minimum investment amount to break even at a MARR of 7%. The process is used 4,000 hours per year, and the hourly savings are expected to be $0.60. They will be using the process for five years, and it is expected to need yearly O & M expenses of $1,400.

a) What amount of initial investment is needed to satisfy the above requirements?

b) If the MARR becomes 5.5% will the process be profitable?

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Financial Management, Finance

Category:- Financial Management
Reference No.:- M91792288

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