Sun Company is considering purchasing new equipment costing $350,000. Sun's management has estimated that the equipment will generate cash inflows as follows: Using the factors in the table below, please calculate the net present value of the net cash inflows above,
Using a discount rate of 10%. Please round all calculations to the nearest whole dollar.

Question

Sun Company is considering purchasing new equipment costing $350,000. Sun's management has estimated that the equipment will generate cash inflows as follows:  Using the factors in the table below, please calculate the net present value of the net cash inflows above,
Using a discount rate of 10%. Please round all calculations to the nearest whole dollar.

Quizplus · Accepted Answer

The net present value of the cash inflows using a discount rate of 10% is calculated by multiplying each cash inflow by its corresponding factor from the table, and then summing these present values. Using this method, the net present value of the cash inflows is $399,325, which is closest to option A. Therefore, the best choice is A.

Sun Company Is Considering Purchasing New Equipment Costing $350,000