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Question: Edmonton's Green Park Hotel is considering purchasing some new laundry equipment for $200,000. Currently the hotel is outsourcing its laundry activities. The hotel's financial controller has estimated that if the laundry equipment is purchased, annual cash flows of $50,000 will be saved in each of the next five years, at which time the laundry equipment will have a zero salvage value. The hotel has a 10% cost of capital.

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