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ABC Company has gathered the following information related to an investment in new equipment: annual net cash inflows ....................... $ 38,230 initial investment ............................ $180,000
ABC Company has gathered the following information related to an investment in new equipment: annual net cash inflows ....................... $ 38,230 initial investment ............................ $180,000 life of new equipment ......................... 10 years salvage value of new equipment in 10 year ..... $ 20,000 cost of capital ............................... 10% If the new equipment is purchased, the old equipment that is currently in use can be sold for $9,000. Assume an income tax rate of 40%. Calculate the after-tax net present value of the new equipment. To answer this question use the present value table factors given below. No credit will be awarded for this question using a means other than the table factors given below to answer this question. Factors from the present value of a lump sum table for: i = 10% n = 6 n = 7 n = 8 n = 9 n = 10 0.565 0.513 0.467 0.424 0.385 Factors from the present value of an annuity table for: i = 10% n = 6 n = 7 n = 8 n = 9 n = 10 4.355 4.868 5.335 5.759 6.500
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