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06. Harris Corp. is considering investing $50,000 in equipment to produce a new product. The useful service life of the equipment is estimated to be
06. Harris Corp. is considering investing $50,000 in equipment to produce a new product. The useful service life of the equipment is estimated to be 10 years, with no salvage value. Straight-line depreciation is used. Harris estimates that production and sale of the new product will increase net income by $5,000 per year. What is the of return on average investment in this equipment? expected rate a. 7.5% b. 15% 2 0% 25% c. d. 97. Fox Corp. is considering purchasing equipment costing $109,000 with an estimated life of 3 years and no salvage value. The net after tax cash flow from the project for each of the 3 years is expected to be $45,000. Fox's cost of capital is 10%. Compute the net present value of the equipment. Present value of $1 due in 3 years, discounted at 10%, is 0.751 . Present value of $1 received annually for 3 years, discounted at 10%, is 2.487. a. $2,548 b. $2,915 c. $3,213 d. $3,616
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