Morgan Company is considering a capital investment of $180000in additional productive facilities. The new machinery is expectedto have a useful life of 6 years with no salvage value.Depreciation is by the straight-line method. During the life of theinvestment annual net income and net annual cash flows areexpected to be $20000 and $50000 respectively. Morgan has a 15%cost of capital rate which is the required rate of return on theinvestment.
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