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Problem #2 - NPV & Profitability Index Midtown Shopping Center is trying to decide between the following two investments: Equipment #1 Equipment #2 Initial outlay
Problem #2 - NPV & Profitability Index Midtown Shopping Center is trying to decide between the following two investments: Equipment #1 Equipment #2 Initial outlay $5,000 Initial outlay $8,000 Annual cash inflow $1,800 Annual cash inflow $2 80D Cost of capital 12% Cost of capital 12% Estimated useful life 4 years Estimated useful fe 4 years Residual value $ 500 Residual value $ 200 Required: Calculate the NPV and profitability index for each equipment. Based on your calculations, which equipment should they purchase
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