(Solution) - A firm is considering purchasing equipment to manufacture a new -(2025 Original AI-Free Solution)

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A firm is considering purchasing equipment to manufacture a new product. The equipment will cost $3M, and expected net cash inflows are $0.35M indefinitely. If market demand for the product is low, then over the next five years the firm will have the option of discarding the equipment on a secondary market for $2.2M. Assume that MARR = 12%, ? = 50%, and r = 6%. What is the value of this investment opportunity for the firm?