Question
Gull Inc. is considering the acquisition of equipment that costs $420,000 and has a useful life of 6 years with no salvage value. The incremental
Gull Inc. is considering the acquisition of equipment that costs $420,000 and has a useful life of 6 years with no salvage value. The incremental net cash flows that would be generated by the equipment are: (Ignore income taxes.)
| Incremental net cash flows | |
| Year 1 | $138,000 |
| Year 2 | $180,000 |
| Year 3 | $149,000 |
| Year 4 | $158,000 |
| Year 5 | $148,000 |
| Year 6 | $128,000 |
| Click here to view Exhibit 13B-1 to determine the appropriate discount factor(s) using tables. |
| If the discount rate is 20%, the net present value of the investment is closest to: (Round discount factor(s) to 3 decimal places, intermediate and final answers to the nearest dollar amount.) a. $144225 b. $84677 c. $435000 d. $591264 PLEASE SHOW ALL WORK |
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Sawyers Internal Auditing Enhancing And Protecting Organizational Value
Authors: The Internal Audit Foundation
7th Edition
1634540522, 9781634540520
