Grady Corp. is considering the purchase of a new piece of equipment. The equipment costs $50,800, and
Question:
Grady Corp. is considering the purchase of a new piece of equipment. The equipment costs $50,800, and will have a salvage value of $5,130 after six years. Using the new piece of equipment will increase Grady's annual cash flows by $6,170. Grady has a hurdle rate of 10%. (Future Value of $1, Present Value of $1, Future Value Annuity of $1, Present Value Annuityof $1.) (Use appropriate factor from the PV tables.)
What is the present value of the increase in annual cash flows? (Round your answer to 2 decimal places.)
What is the present value of the salvage value? (Round your answer to 2 decimal places.)
What is the net present value of the equipment purchase? (Negative value should be indicated by a minus sign. Round your intermediate calculation and final answer to 2 decimal places.)