Figure 13-6
JD, Inc., is considering the purchase of production equipment that costs £400,000. The equipment is expected to generate annual cash inflows of £125,000. The equipment is expected to have a useful life of five years with no salvage value. The firm's cost of capital is 12 per cent.
-Refer to Figure 13-6. Based on quantitative factors, should JD accept, reject, or wait on the project?

Question

Quizplus · Accepted Answer

The Net Present Value (NPV) of the project is positive when calculated with a 12% discount rate, indicating that the project should be accepted based on quantitative factors.

Figure 13-6 JD, Inc., Is Considering the Purchase of Production Equipment That