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A company wishes to buy new equipment for $85,000. The equipment is expected to generate an...

A company wishes to buy new equipment for $85,000. The equipment is expected to generate an additional $35,000 in cash inflows for four years. All cash flows occurat year-end. A bank will make an $85,000 loan to the company at a 10% interest rate so that the company can purchase the equipment. Use the table below todetermine break-even time for this equipment.



Break-even time is longer than 4 years.
Break-even time is between 1 and 2 years.
Break-even time is between 2 and 3 years.
Break-even time is between 3 and 4 years.
This project will never break-even.
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