Golden Corporation is considering the purchase of new equipment costing $77,000. The expected life of the equipment is 10 years. The potential increase in annual net income from the new equipment for the next 10 years depends on the state of the economy as follows. The equipment will be depreciated using straight line depreciation. Golden's cost of capital is 12%. What is the expected NPV? Should they purchase the new equipment?

Question

Golden Corporation is considering the purchase of new equipment costing $77,000. The expected life of the equipment is 10 years. The potential increase in annual net income from the new equipment for the next 10 years depends on the state of the economy as follows.  The equipment will be depreciated using straight line depreciation. Golden's cost of capital is 12%. What is the expected NPV? Should they purchase the new equipment?

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The Answer of Golden Corporation is considering the purchase of new equipment costing $77,000. The expected life of the equipment is 10 years. The potential increase in annual net income from the new equipment for the next 10 years depends on the state of the economy as follows.  The equipment will be depreciated using straight line depreciation. Golden's cost of capital is 12%. What is the expected NPV? Should they purchase the new equipment?

Golden Corporation Is Considering the Purchase of New Equipment Costing