A firm can purchase new equipment for a $150,000 initial investment The equipment generates an annual after tax cash inflow of $44,400 for 4 years a Determine the net present value (NPV) of the equipment, assuming that the firm has a 10 cost of capital Is the project acceptable b If the firm 's cos...

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A firm can purchase new equipment for a $150,000 initial investment. The equipment generates an annual after-tax

Question:

A firm can purchase new equipment for a $150,000 initial investment.
The equipment generates an annual after-tax cash inflow of $44,400 for 4 years.
a. Determine the (NPV) of the equipment, assuming that the firm has a 10% Is the project acceptable?
b. If the firm's is lower than 10%, does the investment in equipment become more or less desirable? What is the highest (closest whole percentage rate) that the firm can have and still find that purchasing the equipment is worthwhile? Discuss this finding in light of your response in part a.
Net Present Value
What is NPV? The net present value is an important tool for capital budgeting decision to assess that an investment in a project is worthwhile or not? The net present value of a project is calculated before taking up the investment decision at... Cost Of Capital
Cost of capital refers to the opportunity cost of making a specific investment . Cost of capital (COC) is the rate of return that a firm must earn on its project investments to maintain its market value and attract funds. COC is the required rate of...