A firm that purchases electricity from the local utility for $400,000 per year is considering installing a steam generator at a cost of $290,000.

A firm that purchases electricity from the local utility for $400,000 per year is considering installing a steam generator at a cost of $290,000. The cost of operating this generator would be $350,000 per year, and the generator will last for five years. If the firm buys the generator, it does not need to purchase any electricity from the local utility. The cost of capital is 12%. 

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