Sigma is thinking about purchasing a new clam digger for $14,000. The expected net cash flows resulting from the digger are $9,000 in year 1, $7,000 in the 2nd year, $5,000 in the 3rd year, and $3,000 in the 4th year. Should Sigma purchase this digger if its cost of capital is 12%?
A) Yes, NPV = $3,176
B) Yes, NPV = $5,084
C) Yes, NPV = $16,605
D) Yes, NPV = $19,084

Question

Quizplus · Accepted Answer

The Answer of Sigma is thinking about purchasing a new clam digger for $14,000. The expected net cash flows resulting from the digger are $9,000 in year 1, $7,000 in the 2nd year, $5,000 in the 3rd year, and $3,000 in the 4th year. Should Sigma purchase this digger if its cost of capital is 12%?
A) Yes, NPV = $3,176
B) Yes, NPV = $5,084
C) Yes, NPV = $16,605
D) Yes, NPV = $19,084

Sigma Is Thinking About Purchasing a New Clam Digger for $14,000