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    NPV for the investment

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    Clare Company is considering the purchase of some labor-saving equipment for its packaging department. The equipment is expected to result in labor cost savings of $50,000 per year for the expected 5 year life of the equipment. The cost of the equipment is $120,000 and the desire rate of return is 6%.

    What is the NPV for the investment?

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    Solution Preview

    NPV = PV of inflows - initial investment
    Here the inflows are the labor cost ...

    Solution Summary

    The solution explains how to determine the NPV for the investment