(Ignore income taxes in this problem)The management of Hirsh Corporation is investigating an investment in equipment that would have a useful life of 9 years.The company uses a discount rate of 13% in its capital budgeting.The net present value of the investment,excluding the annual cash inflow,is -$666,493.To the nearest whole dollar how large would the annual cash inflow have to be to make the investment in the equipment financially attractive?

Question

Quizplus · Accepted Answer

Minimum annual cash flows from the intangible benefits
= Negative net present value to be offset F1F1F1S1F1F1F10 Present value factor
= $666,493 F1F1F1S1F1F1F10 5.132 = $129,870

(Ignore Income Taxes in This Problem)The Management of Hirsh Corporation