Question
Cleveland Cove Enterprises is evaluating the purchase of an elaborate hydraulic lift system for all of its locations to use for the boats brought in
Cleveland Cove Enterprises is evaluating the purchase of an elaborate hydraulic lift system for all of its locations to use for the boats brought in for repair. The company has narrowed their choices down to two: the B14 Model and the F54 Model. Financial data about the two choices follows. (For the B14 Model, the present value for this scenario is
0.351
and the present value of annuity for this scenario is
4.639
The present value for this scenario is
0.404
and the present value of annuity for this scenario is
4.968
| B14 Model | F54 Model | ||
| Investment | $310,000 | $230,000 | |
| Useful life (years) | 8 | 8 | |
| Estimated annual net cash inflows for useful life | $70,000 | $38,000 | |
| Residual value | $20,000 | $18,000 | |
| Depreciation method | Straightline | Straightline | |
| Required rate of return | 14% | 12% |
What is the net present value of the B14 Model?
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