Kevin Petty owns Discount Parts, Inc. He is contemplating the purchase of a brake lathe that could
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Kevin Petty owns Discount Parts, Inc. He is contemplating the purchase of a brake lathe that could be used to refurbish brake parts for customers. The following estimates are available:
Required: Determine the net present value of the brake lathe purchase.
Transcribed Image Text:
Initial outlay Annual cash inflow Cost of capital Estimated life of the brake lathe Estimated residual value of the brake lathe $6,500 $1,500 16% 6 years $1,000
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