1. A company is considering purchase of a new equipment that will produce a new range of spare parts to complement its existing line of products. The new equipment will costs $500,000. Sales are expected to be around $200,000 per year and variable costs at $60,000. At the end of five years, the equipment can be sold for $100,000. Using straight line depreciation, should they purchase this equipment? Assume the cost of capital is 12% and the tax rate is 30%.

What are the cash flows and what is the NPV - show in Excel