Bill's Burgers is considering purchasing a new, environmentally friendly freezer costing $12 000 to replace an existing freezer which cost $8 000 five years ago. The new freezer will reduce operating cash outflows by $3 000 per year for its entire 4-year useful life, and will have a residual value of $4 000 at the end of its life. The business' minimum acceptable rate of return is 8%.
Required:
Calculate the net present value of the investment in the freezer.

Question

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The Answer of Bill's Burgers is considering purchasing a new, environmentally friendly freezer costing $12 000 to replace an existing freezer which cost $8 000 five years ago. The new freezer will reduce operating cash outflows by $3 000 per year for its entire 4-year useful life, and will have a residual value of $4 000 at the end of its life. The business' minimum acceptable rate of return is 8%.
Required:
Calculate the net present value of the investment in the freezer.

Bill's Burgers Is Considering Purchasing a New, Environmentally Friendly Freezer