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Diamond company is considering purchasing a machine that

Question - Diamond Company is considering purchasing a machine that would cost $756,000 and have a useful life of 8 years. The machine would reduce cash operating costs by $132,632 per year. The machine would have a salvage value of $151,200 at the end of the project.

Compute:

a. Net present value

b. Internal rate of return

c. Profitability index

d. Payback period

e. Simple rate of return

f. Should the company purchase the machine? Why or why not?

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