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Question: A firm is considering the purchase of a new technology that is expected to produce an annual net saving in labor costs of $8000 in each of the six years. The initial cost is $30000, and annual maintenance cost is $1000. The company can access the required fund at the current market interest rate of 14% per annum compounded annually. By calculating NPV of the proposed expenditure, decide whether the technology should be purchased.

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Basic Finance, Finance

Category:- Basic Finance
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