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The McGraw-Hill 36-Hour Course: Finance for Non-Financial Managers 3/E, 3rd Edition by Robert Cooke, Susan Shelly, H. George Shoffner

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CHAPTER 6BUYING, LEASING, OR DOING WITHOUT

JUSTIFYING THE PURCHASE OF EQUIPMENT

In Chap. 5 we talked about the depreciation of the Automatic Window Machine that the Spouse House Company purchased, and I promised that in this chapter we would discuss the analysis that Rosie Rouse conducted before making the purchase.

During her first year of selling Spouse Houses, Rosie learned that customers wanted windows in the houses. (She had expected that the houses would be used for only one or two nights at a time, but apparently many were used for longer periods of discord.)

Initially, she met this need by having her supplier, Fred’s Sheds, install the windows in the sheds that the Spouse House Company converted into Spouse Houses. For three windows, ...

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