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Adolphi Consulting is considering purchasing a new server for $250,000 and software for $100,000 to enhance its project collaboration capabilities. It will cost an additional $30,000 to do the site preparation. With the new server installed, Adolphi Manufacturing forecast that its annual cash flow will increase by $100,000. The machine is expected to have a life span of 5 years with an expected salvage value of $45,000. (That is $45,000 will be received at the end of year 5 in addition to the $100,000.) At an MARR of 12% and using a present worth criterion, would the purchase of the server be justified?

Microeconomics, Economics

  • Category:- Microeconomics
  • Reference No.:- M938750

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