Question
Item Value Current Equipment Salvage $20,000 New Equipment Cost $280,000 Additional Working Capital $50,000 Annual Cash Inflows $80,000 System Life 5 years Salvage Value (New)
Item | Value |
Current Equipment Salvage | $20,000 |
New Equipment Cost | $280,000 |
Additional Working Capital | $50,000 |
Annual Cash Inflows | $80,000 |
System Life | 5 years |
Salvage Value (New) | $20,000 |
Required Rate of Return | 11% |
Installation Cost | $10,000 |
Requirements:
- Calculate the NPV of the investment.
- Assess the purchase decision.
- Factor in the salvage values.
- Include additional working capital and installation costs.
- Apply a discount rate of 11%.
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Advanced Accounting
Authors: Gail Fayerman
1st Canadian Edition
9781118774113, 1118774116, 111803791X, 978-1118037911
