Question
A company is considering new equipment that will cost $20,000. The equipment will increase capacity and increase contribution margin $4,000 per year through increased sales.
A company is considering new equipment that will cost $20,000. The equipment will increase capacity and increase contribution margin $4,000 per year through increased sales. The equipment has a 5-year life and a $1,000 salvage value. The company uses a 10% desired return on investment. What is the net present value of this proposed investment (slight differences due to rounding are possible)? Use the TVM Calculation Template in Excel to calculate.
Multiple Choice
-
$2,200
-
$0
-
($1,210)
-
($4,220)
Step by Step Solution
There are 3 Steps involved in it
Step: 1
Get Instant Access with AI-Powered Solutions
See step-by-step solutions with expert insights and AI powered tools for academic success
Step: 2
Step: 3
Ace Your Homework with AI
Get the answers you need in no time with our AI-driven, step-by-step assistance
Get Started
Financial And Managerial Accounting
Authors: John J. Wild
9th Edition
1260728773, 9781260728774
