NPV and tolerable error Worley Company is evaluating the acquisition of equipment with a cost of $80,000,
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NPV and tolerable error Worley Company is evaluating the acquisition of equipment with a cost of $80,000, no salvage value, and an 8-year life. The expected cash flow from using the equipment is $20,000 per year. The company's cost of capital is 15 percent.
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REQUIRED a. Compute the net present value of the investment. b. Determine the magnitude of error in the estimate of cash inflows that the company can tolerate on the project.
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