Question
Replacing old equipment at an immediate cost of $90,000 and an additional outlay of $20,000 in five years from now will result in savings of
Replacing old equipment at an immediate cost of
$90,000
and an additional outlay of
$20,000 in
five
years from now will result in savings of
$22,000
per year for
8
years. The required rate of return is
14%
compounded
annually.
Compute the net present value and determine if the investment should be accepted or rejected according to the net present value criterion.
Question content area bottom
Part 1
The net present value of the project is
$ enter your response here.
(Round the final answer to the nearest dollar as needed. Round all intermediate values to six decimal places as needed.)
Part 2
The proposal should be
rejected.
accepted.
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