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Redman Company is considering an investment in new machinery. The details of the investment are as follows:

Cost of the machinery $250,000
Annual cash flows $75,000
Useful Life 4 years
Residual Value $25,000

The company uses straight line depreciation for its machinery and requires a 12% rate of return

What is the rate of return? Net present Value?Would you advise the company to invest in the machinery? Why or why not?

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Accounting Basics, Accounting

Category:- Accounting Basics
Reference No.:- M9951446

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