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Company A has purchased $500,000 in equipment, which can be sold for a salvage value of $300,000 at any time. The best interest rate on alternative investments is 5%. What is the cost of using this machinery for one year? How would your answer be different if the machinery had not yet been purchased?

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This solution provides a detailed, step by step explanation of the given economics question regarding present value.

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This is a question of present value:
The initial investment is 500,000
After one year, the machine can be sold at
The ...

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