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( [8] ) A machine can be purchased for50,000. Machine will contribute- 12,000 per year for the next fiveyears. Assume borrowing cost is10% per annum. Determine whethermachino should be purchased ornot:(a) Should be purchased(b) Should not bo purchased(c) Can't say about purchase(d) None of the above​

Answer»

Answer:

(a) Should be purchased

Step-by-step explanation:

  • this is because the BORROWING charge is 10% p.a. which means ₹5,000 each year
  • and machine will contribute ₹12,000 each year
  • so the PROFIT for each year is ₹12,000 - ₹5,000 = ₹7,000
  • hence TOTAL profit is ₹35,000


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