Exercise 8-7

Basic NPV with Salvage ValueSchaefer Organic Farms purchased a new tractor at a cost of $80,000. Annual operating cash inflows are expected to be $30,000 each year for four years. At the end of the tractor's useful life, the salvage value of the tractor is expected to be $5,000.

Required:

What is the net present value if the cost of capital is 12 percent? Use the time value of money charts for your calculations. (Ignore income taxes.) Round your answer to the nearest whole number.

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