Question
oor to Door Moving Company is considering purchasing new equipment that costs $ 730 comma 000$730,000. Its management estimates that the equipment will generate cash
oor to Door Moving Company is considering purchasing new equipment that costs
$ 730 comma 000$730,000.
Its management estimates that the equipment will generate cash inflows as follows:
Year 1 | $ 204 comma 000$204,000 |
2 | 204 comma 000204,000 |
3 | 264 comma 000264,000 |
4 | 264 comma 000264,000 |
5 | 170 comma 000170,000 |
Present value of $1:
6% | 7% | 8% | 9% | 10% | |
1 | 0.943 | 0.935 | 0.926 | 0.917 | 0.909 |
2 | 0.890 | 0.873 | 0.857 | 0.842 | 0.826 |
3 | 0.840 | 0.816 | 0.794 | 0.772 | 0.751 |
4 | 0.792 | 0.763 | 0.735 | 0.708 | 0.683 |
5 | 0.747 | 0.713 | 0.681 | 0.650 | 0.621 |
The company's annual required rate of return is 8%. Using the factors in the table, calculate the present value of the cash inflows. (Round all calculations to the nearest whole dollar.)
A.
$ 792 comma 000$792,000
B.
$ 883 comma 158$883,158
C.
$ 36 comma 312$36,312
D.
$ 902 comma 000
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