53.8
8. Your company is considering a new
machine. The machine will generate an extra $13 million per year
starting next year, but will require $2 million in maintenance
every two years (starting 2 years from now and with the last
payment in year 28). The machine has a 30-year life and will cost
$100 million today. The correct discount rate for this investment
is 14% per year. Is your recommendation to buy the machine or
not? Justify your recommendation with the appropriate analysis.
[8 pts]