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Return to question Santana Rey is considering the purchase of equipment for Business Solutions that would allow the company to add a new product
Return to question Santana Rey is considering the purchase of equipment for Business Solutions that would allow the company to add a new product to its computer furniture line. The equipment is expected to cost $382,800 and to have a six-year life and no salvage value. The equipment is expected to generate income of $15,639 and net cash flow of $77,848 in each year of its six-year life. Santana requires an 7% return on all investments. (PV of $1, FV of $1, PVA of $1, and FVA of $1) (Use appropriate factor(s) from the tables provided.) (Negative net present values should be indicated with a minus sign. Do not round intermediate calculations. Round your present value factor to 4 decimals and final answers to the nearest whole number.) Required: 1-a. Compute the payback period for this equipment. 1-b. Compute the net present value for this equipment. 1-c. Compute internal rate of return for this equipment. 2. If Santana requires investments to have payback periods of four years or less, should she invest in this equipment? 3. If Santana requires investments to have at least an 7% internal rate of return, should she invest in this equipment? > Answer is complete but not entirely correct. Complete this question by entering your answers in the tabs below. Req 1A Req 1B Req 1C Req 2 and 3 Compute the net present value for this equipment. (Negative values must be entered as a negative number.) Years 1-6 Initial investment Net present value Net Cash Flows $ 77,848 Present Value of Annuity at 7% 4.7665 Present Value of Net = Cash Flows = $ 371,062 = 382,800 = $ 11,738 x < Req 1A Req 1C >
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