Use the information below to answer the following question(s).
Sommer 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:
Sommer Corporation's hurdle rate is 12%. Assume the residual value is zero.
-If Sommer Corporation decides to refurbish the equipment at a cost of $50,000 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. The NPV of just the refurbishment is closest to

Question

Use the information below to answer the following question(s).
Sommer 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:
  Sommer Corporation's hurdle rate is 12%. Assume the residual value is zero.
-If Sommer Corporation decides to refurbish the equipment at a cost of $50,000 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. The NPV of just the refurbishment is closest to

Quizplus · Accepted Answer

C)
 11ea895a_933c_8437_861b_659405df2313_TB1238_00

Use the Information Below to Answer the Following Question(s)