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Question(s) / Instruction(s):

Rogers Company is considering purchasing equipment. The equipment will produce the following cash flows:

Year 1    $20,000

Year 2    $30,000

Rogers requires a minimum rate of return of 10%. What is the maximum price Rogers should pay for this equipment?

(Note that your answer could slightly differ due to rounding.)

A.            $21,487.65

B.            $50,000.00

C.            $25,000.00

D.            $42,975.30

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