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Question 45

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Briarwood Enterprises is considering the purchase of some new equipment that will cost the company $151,800. The equipment is estimated to have a 6 year life and no salvage value. The equipment is expected to generate $34,000 of cash inflows each year over the life of the asset. Briarwood's cost of capital is 10%.
-Ignoring income taxes,Briarwood should:


A) not purchase the equipment since the net-present-value is negative
B) not purchase the equipment since the net-present-value is positive
C) purchase the equipment since the net-present-value is negative
D) purchase the equipment since the net-present-value is positive

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