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Jackson’s Quality Copies will pay $50,000 for the new copier, which is expected to last 7...

Jackson’s Quality Copies will pay $50,000 for the new copier, which is expected to last 7 years. Annual maintenance costs will total $1,000 a year. Labor cost savings for back office staff and a front desk receptionist will be $6,000 and $5,000 a year, respectively. The copier will have a residual value of $5,000 at the end of 7 years. The accountant at Jackson’s Quality Copies, Mr. Haley, has established the cost of capital (required rate of return for investors) for the firm at 10 percent.

Required:

Calculate the NPV of the project and briefly discuss whether to accept or reject the project.

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jeff jeffy answered 2 years ago
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