The K-Nine Dog Food Company Is Considering the Purchase of Additional

question 200

Multiple Choice

The K-Nine dog food company is considering the purchase of additional canning equipment.They expect that adding the equipment will yield $200,000 at the end of the first year and $250,000 at the end of the second year and then nothing after that.At which of the following prices and interest rates would K-Nine buy the equipment?

• A)$415,000 if the interest rate is 5%
• B)$419,000 if the interest rate is 4%
• C)K-Nine would buy the equipment in both cases.
• D)K-Nine would not buy the equipment in either case.

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