Math Problem Statement
A company is considering expanding their production capabilities with a new machine that costs $59,000 and has a projected lifespan of 6 years. They estimate the increased production will provide a constant $10,000 per year of additional income. Money can earn 1.5% per year, compounded continuously. Should the company buy the machine?
Solution
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Math Problem Analysis
Mathematical Concepts
Finance
Time Value of Money
Net Present Value (NPV)
Continuous Compounding
Formulas
NPV formula with continuous compounding
Theorems
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Suitable Grade Level
Business and Finance Professionals
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