Question
Brief Exercise G-23 Sheffield Company is considering purchasing equipment. The equipment will produce the following cash inflows: Year 1, 18,000; Year 2, 23,000; and Year
Brief Exercise G-23
Sheffield Company is considering purchasing equipment. The equipment will produce the following cash inflows: Year 1, 18,000; Year 2, 23,000; and Year 3, $33,000. Sheffield requires a minimum rate of return of 8%. What is the maximum price Sheffield should pay for this equipment?
(For calculation purposes, use 5 decimal places as displayed in the factor table provided.) (Round answer to 2 decimal places, e.g. 5,275.50.)
To determine the present value of the future cash flows, discount the future cash flows at 8%, using Table 3.
Need factor table
year 1 ? $
Year 2 ?
Year 3?
Present value of future cash flows? $
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