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Calculate the present value of annuity

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    Assignment ID: FG133134616

    Question – Monroe Corporation is considering the purchase of new equipment. The equipment will cost $44,000 today. However, due to its greater operating capacity, Monroe expects the new equipment to earn additional revenues of $7,250 by the end of each year for the next 10 years.

    a. Assuming a discount rate of 2.5% compounded annually, calculate the present value of annuity.

    b. Should Monroe make the purchase?

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