La Grange Company is evaluating an opportunity to invest $50,000 in new manufacturing equipment. It will have a useful life of 3 years, and will generate $10,000 cash flows at the end of Year 1; $20,000 of cash flows at the end of Year 2; and $30,000 of cash flows at the end of Year 3. If La Grange uses a discount rate of 10% to calculate NPV, they will accept the opportunity as a good investment.

Question

La Grange Company is evaluating an opportunity to invest $50,000 in new manufacturing equipment. It will have a useful life of 3 years, and will generate $10,000 cash flows at the end of Year 1; $20,000 of cash flows at the end of Year 2; and $30,000 of cash flows at the end of Year 3. If La Grange uses a discount rate of 10% to calculate NPV, they will accept the opportunity as a good investment.
La Grange Company is evaluating an opportunity to invest $50,000 in new manufacturing equipment. It will have a useful life of 3 years, and will generate $10,000 cash flows at the end of Year 1; $20,000 of cash flows at the end of Year 2; and $30,000 of cash flows at the end of Year 3. If La Grange uses a discount rate of 10% to calculate NPV, they will accept the opportunity as a good investment.

Quizplus · Accepted Answer

The Answer of La Grange Company is evaluating an opportunity to invest $50,000 in new manufacturing equipment. It will have a useful life of 3 years, and will generate $10,000 cash flows at the end of Year 1; $20,000 of cash flows at the end of Year 2; and $30,000 of cash flows at the end of Year 3. If La Grange uses a discount rate of 10% to calculate NPV, they will accept the opportunity as a good investment.

La Grange Company Is Evaluating an Opportunity to Invest $50,000