Kansas Mining is evaluating a proposal to invest in a new piece of equipment costing $50,000 with the following annual cash flows over the equipment's 4-year useful life:
$$\begin{array} { lr }
\text { Cash revenues } & \$ 60,000 \
\text { Cash expenses } & (34,000) \
\text { Depreciation expenses (straight-line) } & \underline{(10,000)} \
\text { Income provided from equipment } & \underline{\$ 16,000} \
\text { Cost of capital } & 12 \text { percent }
\end{array}$$ $\begin{array}{ccccc}
\underline{\text { Period }} & \underline{12 \%} & \underline{14 \%} & \underline{16 \%} & \underline{18 \%} \
4 & 3.03735 & 2.91371 & 2.79818 & 2.69006 \
5 & 3.60478 & 3.43308 & 3.27429 & 3.12717 \
6 & 4.11141 & 3.88867 & 3.68474 & 3.49760
\end{array}$ The investment's net present value is:

Question

Kansas Mining is evaluating a proposal to invest in a new piece of equipment costing $50,000 with the following annual cash flows over the equipment's 4-year useful life:
$$\begin{array} { lr } 
\text { Cash revenues } & \$ 60,000 \
\text { Cash expenses } & (34,000) \
\text { Depreciation expenses (straight-line) } & \underline{(10,000)} \
\text { Income provided from equipment } & \underline{\$ 16,000} \
\text { Cost of capital } & 12 \text { percent }
\end{array}$$ $\begin{array}{ccccc}
\underline{\text { Period }} & \underline{12 \%} & \underline{14 \%} & \underline{16 \%} & \underline{18 \%} \
4 & 3.03735 & 2.91371 & 2.79818 & 2.69006 \
5 & 3.60478 & 3.43308 & 3.27429 & 3.12717 \
6 & 4.11141 & 3.88867 & 3.68474 & 3.49760
\end{array}$ The investment's net present value is:

Quizplus · Accepted Answer

The Answer of Kansas Mining is evaluating a proposal to invest in a new piece of equipment costing $50,000 with the following annual cash flows over the equipment's 4-year useful life:
$$\begin{array} { lr } 
\text { Cash revenues } & \$ 60,000 \
\text { Cash expenses } & (34,000) \
\text { Depreciation expenses (straight-line) } & \underline{(10,000)} \
\text { Income provided from equipment } & \underline{\$ 16,000} \
\text { Cost of capital } & 12 \text { percent }
\end{array}$$ $\begin{array}{ccccc}
\underline{\text { Period }} & \underline{12 \%} & \underline{14 \%} & \underline{16 \%} & \underline{18 \%} \
4 & 3.03735 & 2.91371 & 2.79818 & 2.69006 \
5 & 3.60478 & 3.43308 & 3.27429 & 3.12717 \
6 & 4.11141 & 3.88867 & 3.68474 & 3.49760
\end{array}$ The investment's net present value is:

Kansas Mining Is Evaluating a Proposal to Invest in a New