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You are evaluating two processing tanks for your confectionary business. The aluminum tank costs $425,000, has a three-year life, and has pretax operating costs of $15,000 per year. The stainless jacketed copper tank costs $645,000, has a five-year life, and has pretax operating costs of $12,500. Both tanks will be depreciated straight line to zero over their lives, with no salvage value. If your tax rate is 35% and your discount rate is 15%, which machine should you buy?

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Financial Management, Finance

Category:- Financial Management
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