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(Ignore income taxes in this problem.) Gull Inc. is considering the acquisition of equipment that costs $680,000 and has a useful life of 6 years
(Ignore income taxes in this problem.) Gull Inc. is considering the acquisition of equipment that costs $680,000 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:
Incremental net cash flows | |
Year 1 | $159,000 |
Year 2 | $226,000 |
Year 3 | $170,000 |
Year 4 | $187,000 |
Year 5 | $177,000 |
Year 6 | $156,000 |
If the discount rate is 12%, the net present value of the investment is closest to: (Use Exhibit11b-1, Exhibit11b-2)
$395,000
$741,532
$333,468
$61,532
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