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Investment Timing: Purchasing an Optical Scanner

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You can purchase an optical scanner today for $400. The scanner provides benefits worth $60 a year. The expected life of the scanner is 10 years. Scanners are expected to decrease in price by 20 percent per year. Suppose the discount rate is 10 percent. Should you purchase the scanner today or wait to purchase? When is the best purchase time?

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Solution Summary

It is determined whether a new optical scanner should be invested in. The expert examines purchasing an optical scanner.

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I must wait to purchase. If I purchase today, my net worth will decrease by $31.33 which is equal to the ...

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