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X Company is planning to drop a department that has shown a $8,000 loss in each of the last 3 years. If the department is dropped, three things will happen: 1) the annual loss will be avoided, 2) some equipment will be sold immediately for $18,000, 3) sales of another product will be increased, contributing $1,000 to annual profits. Assuming a 6 year time horizon and a discount rate of 5%, what is the net present value of dropping the department?

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Financial Management, Finance

Category:- Financial Management
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