Meredith Products Inc. is considering a new equipment purchase. The estimated cost of the equipment is $80,000. The equipment is expected to generate annual operating cash inflows for the next three years as follows:
The equipment is expected to have a salvage value at the end of its useful life of $15,000. The company uses a discount rate of 14%.
Required: Compute the net present value of the equipment. (Ignore income taxes)

Question

Meredith Products Inc. is considering a new equipment purchase. The estimated cost of the equipment is $80,000. The equipment is expected to generate annual operating cash inflows for the next three years as follows:
  The equipment is expected to have a salvage value at the end of its useful life of $15,000. The company uses a discount rate of 14%.
Required: Compute the net present value of the equipment. (Ignore income taxes)

Quizplus · Accepted Answer

The Answer of Meredith Products Inc. is considering a new equipment purchase. The estimated cost of the equipment is $80,000. The equipment is expected to generate annual operating cash inflows for the next three years as follows:
  The equipment is expected to have a salvage value at the end of its useful life of $15,000. The company uses a discount rate of 14%.
Required: Compute the net present value of the equipment. (Ignore income taxes)