Westaus Instant Scaffolding desires to buy a new crane and accessories to help install and remove scaffoldings at building sites.The machine sells for $150 000 and requires working capital of $20 000.Its estimated useful life is six years and it will have a salvage value of $35 120.Recovery of working capital will be $20 000 at the end of its useful life.Annual cash savings from the purchase of the machine will be $40 000.
Required:
a.Calculate the net present value at a 14% required rate of return.
b.Calculate the internal rate of return.
c.Determine the discounted payback period of the investment.
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Question

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The Answer of Westaus Instant Scaffolding desires to buy a new crane and accessories to help install and remove scaffoldings at building sites.The machine sells for $150 000 and requires working capital of $20 000.Its estimated useful life is six years and it will have a salvage value of $35 120.Recovery of working capital will be $20 000 at the end of its useful life.Annual cash savings from the purchase of the machine will be $40 000.
Required:
a.Calculate the net present value at a 14% required rate of return.
b.Calculate the internal rate of return.
c.Determine the discounted payback period of the investment.
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Westaus Instant Scaffolding Desires to Buy a New Crane and Accessories