Grady Corp. is considering the purchase of a new piece of equipment. The equipment costs $51,300, and will have a salvage value of $5,070 after seven years. Using the new piece of equipment will increase Gradys annual cash flows by $6,100. Grady has a hurdle rate of 10%.

1)What is the present value of the increase in annual cash flows?

2) What is the present value of the salvage value?

3) What is the net present value of the equipment purchase?

4)Based on financial factors, should Grady purchase the equipment?

TABLE 11.1A Future Value of $1 Periods 2% 3% 3.75% 1.0000 1.0000 1.0000 1.0200 1.0300 1.0375 1.0404 1.0609 1.0764 1.0927 1.1168 1.0612 1.0824. 1.1255 1.1587 1.1041 1.1593 1.2021 1.1262 1.1941 1.2472 1.2299 1.1487 1.2939 1.2668 1.3425 1.1951 1.3048 1.3928 1.3439 10 1.2190 1.4450 2.0882 20 1.4859 1.8061 Periods 9% 10% 11% 1.0000 1.0000 1.0000 1.0900 1.1000 1.1100 1.1881 1.2100 1.2321 1.2950 1.3310 1.3676 1.4116 1.4641 1.5181 1.5386 1.6105 1.6851 1.6771 1.7716 1.8704 1.8280 1.9487 2.0762 1.9926 2.1436 2.3045 2.1719 2.5580 2.3579 10 2.3674. 2.5937 2.8394 5.6044 6.7275 8.0623 4% 1.0000 1.0400 1.0816 1.1249 1.1699 1.2167 1.2653 1.3159 1.3686 1.4233 1.4802 2.1911 12% 1.0000 1.1200 1.2544. 1.4049 1.5735 1.7623 1.9738 2.2107 2.4760 2.7731 3.1058 9.6463 4.25% 1.0000 1.0425 1.0868 1.1330 1.1811 1.2313 1.2837 1.3382 1.3951 1.4544 1.5162 2.2989 13% 1.0000 1.1300 1.2769 1.4429 1.6305 1.8424. 2.0820 2.3526 2.6584 3.0040 3.3946 11.5231 5% 1.0000 1.0500 1.1025 1.1576 1.2155 1.2763 1.3401 1.4071 1.4775 1.5513 1.6289 2.6533 14% 1.0000 1.1400 1.2996 1.4815 1.6890 1.9254 2.1950 2.5023 2.8526 3.2519 3.7072 13.7435 6%, 1.0000 1.0600 1.1236 1.1910 1.2625 1.3382 1.4185 1.5036 1.5938 1.6895 1.7906 3.2071 15% 1.0000 1.1500 1.3225 1.5209 1.7490 2.0114. 2.3131 2.6600 3.0590 3.5179 4.0456 16.3665 7% 1.0000 1.0700 1.1449 1.2250 1.3108 1.4026 1.5007 1.6058 1.7182 1.8385 1.9672 3.8697 20% 1.0000 1.2000 1.4400 1.7280 2.0736 2.4883 2.9860 3.5832 4.2998 5.1598 6.1917 38.3376 8% 1.0000 1.0800 1.1664 1.2597 1.3605 1.4693 1.5869 1.7138 1.8509 1.9990 2.1589 4.6610 25% 1.0000 1.2500 1.5625 1.9531 2.4414 3.0518 3.8147 4.7684. 5.9605 7.4506 9.3132 86.7362