Superior Printing is considering a capital investment for a new printing press with a ten-year life.Superior's cost of capital is 10%.Relevant cash flows and related present value factors are as follows: Investment in printing press = $240,000.
Investment in working capital items = $10,000
Annual net cash inflow from operating the press = $40,000.
Salvage value of the press = $18,000.
Present value of $1 (10 Years @ 10%) = 0.3855
Present value of an annuity of $1 (10 Years @ 10%) = 6.1446
The present value of the salvage value from the press is:
A) $5,378.
B) $6,939.
C) $15,420.
D) $244,584.
Correct Answer:
Verified
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