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Grady Corp is considering the purchase of a new piece of equiptment. The equiptment costs $51,900, and will have a salvage value of $5080 after
Grady Corp is considering the purchase of a new piece of equiptment. The equiptment costs $51,900, and will have a salvage value of $5080 after nine years. Using the new piece of equiptment will increase Grady's annual cash flows by $6170. Grady has a hurdle rate of 9% (Future Value of $1, Present Value of $1, Future Value Annuity of $1, Present Value Annuity of $1.)
Grady Corp. is considering the purchase of a new piece of equipment. The equipment costs $51.900, and will have a salvage value of $5080 after nine years. Using the new piece of equipment will increase Grady's annual cash flows by $6,170. Grady has a hurdle rate of 9%. (Future Value of $1. Present Value of $1. Future Value Annuity of $1. Present Value Annuity of $1.) (Use appropriate factor from the PV tables.) Q. What is the present value of the increase in annual cash flows? (Round your answer to 2 decimal places.) Prosont Value b. What is the present value of the salvage value? (Round your answer to 2 decimal places.) Present Value Present Valio c. 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.) Net Present Value d. Based on financial factors should Grady purchase the equipment? Yes NO Step by Step Solution
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