(Present value tables are needed. )Mulheim Corporation is deciding whether to automate one phase of its production process.The equipment has a six-year life and will cost $410,000.Projected net cash inflows from the equipment are as follows:

Mulheim Corporation's hurdle rate is 12%.
If Mulheim Corporation decides to refurbish the equipment at a cost of $60,000 at the end of year 6,it could be used for one more year and would have a $30,000 residual value at the end of year 7.Assume the cash inflow in year 7 is $65,000.What is the NPV of just the refurbishment?

Question

(Present value tables are needed. )Mulheim Corporation is deciding whether to automate one phase of its production process.The equipment has a six-year life and will cost $410,000.Projected net cash inflows from the equipment are as follows:

Mulheim Corporation's hurdle rate is 12%.
If Mulheim Corporation decides to refurbish the equipment at a cost of $60,000 at the end of year 6,it could be used for one more year and would have a $30,000 residual value at the end of year 7.Assume the cash inflow in year 7 is $65,000.What is the NPV of just the refurbishment?

Quizplus · Accepted Answer

B)
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(Present Value Tables Are Needed