Cloud Corp.is considering the purchase of a new piece of equipment.The equipment costs $30,000,and will have a salvage value of $4,000 after nine years.Using the new piece of equipment will increase Cloud's annual cash flows by $6,000.Cloud has a hurdle rate of 12%.
a.What is the net present value?
b.What would the net present value be with a 15% hurdle rate?
c.Based on the NPV calculations,in what range would the equipment's internal rate of return fall?

Question

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The Answer of Cloud Corp.is considering the purchase of a new piece of equipment.The equipment costs $30,000,and will have a salvage value of $4,000 after nine years.Using the new piece of equipment will increase Cloud's annual cash flows by $6,000.Cloud has a hurdle rate of 12%.
a.What is the net present value?
b.What would the net present value be with a 15% hurdle rate?
c.Based on the NPV calculations,in what range would the equipment's internal rate of return fall?