Question

sansariff company invests in a new piece of equipment costing $40,000. the equipment is expected to yield the following amounts per year for the equipment's four-year useful life: cash revenues $ 60,000 cash expenses (32,000) depreciation expenses (straight-line) (10,000) income provided from equipment $ 18,000 cost of capital 14% what is the net present value of this investment in equipment, assuming no taxes are paid?

Answer 1

Answer: NPV= $41,592

Step-by-step explanation:

initial investment: $40,000

Annual cash inflows: 60,000-28000

PVIFA (i,n)= 2.914

$28,000 x 2.914-$40,000= $41,592 NPV