Trenton Inc.is considering an equipment purchase that has a cost of $15 000.The equipment is expected to have a salvage value of $2000 at the end of three years.In addition,the equipment is expected to generate cash flows over the next three years as follows:
$\begin{array}{cc}
\text { Year } & \text { Annual cash flow } \
\hline 1 & \$ 8000 \
2 & \$ 6000 \
3 & \$ 3000
\end{array}$

If Trenton's cost of capital is equal to 14 per cent,the net present value of the equipment is: (ignore income taxes)

Question

Trenton Inc.is considering an equipment purchase that has a cost of $15 000.The equipment is expected to have a salvage value of $2000 at the end of three years.In addition,the equipment is expected to generate cash flows over the next three years as follows:
$\begin{array}{cc}
\text { Year } & \text { Annual cash flow } \
\hline 1 & \$ 8000 \
2 & \$ 6000 \
3 & \$ 3000
\end{array}$

If Trenton's cost of capital is equal to 14 per cent,the net present value of the equipment is: (ignore income taxes)

Quizplus · Accepted Answer

The Answer of Trenton Inc.is considering an equipment purchase that has a cost of $15 000.The equipment is expected to have a salvage value of $2000 at the end of three years.In addition,the equipment is expected to generate cash flows over the next three years as follows:
$\begin{array}{cc}
\text { Year } & \text { Annual cash flow } \
\hline 1 & \$ 8000 \
2 & \$ 6000 \
3 & \$ 3000
\end{array}$

If Trenton's cost of capital is equal to 14 per cent,the net present value of the equipment is: (ignore income taxes)

Trenton Inc Year Annual cash flow 1$80002$60003$3000\begin{array}{cc}\text { Year } & \text { Annual cash flow } \\\hline 1 & \$ 8000 \\2 & \$ 6000 \\3 & \$ 3000\end{array} Year 123​ Annual cash flow $8000$6000$3000​​

Trenton Inc $\begin{array}{cc}\text { Year } & \text { Annual cash flow } \\\hline 1 & \$ 8000 \\2 & \$ 6000 \\3 & \$ 3000\end{array}$