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Suppose which you are offered a new piece of equipment for $10,000. The equipment will produce 10,000 units per year with the margin of $6.00 per unit. Demand for product being produced has been 2,000 units per year. Your current equipment is completely depreciated and can manufacture the 2,000 units per year at but at a margin of only $4.00 per unit. Should you buy the new equipment? Under what situations?

Operation Management, Management Studies

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