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Ross Company is considering the purchase of a new piece of equipment. The equipment costs $19,000, and will have a salvage value of $1,000 after
Ross Company is considering the purchase of a new piece of equipment. The equipment costs $19,000, and will have a salvage value of $1,000 after 5 years. Using the new piece of equipment will increase Ross's annual cash flows by $5,000, Ross has a hurdie rate of 10% (The present value annuity factor where interest rate is 10% and 5 years is 3.7908; the present value factor where interest rate is 10% and 5 years is What is the present value of the Increase in annual cash flows? 0.6209) QUESTION 35 Refer to Question 34 (Ross Company). What is the present value of the salvage value? QUESTION 36 Refer to Question 34 (Ross Company). What is the net present value of the equipment purchase? Refer to Question 34 (Ross Company). Based on the net present value, should Ross Company purchase the equipment? Yes. No. QUESTION 38 Refer to Question 34 (Ross Company). Based on the NPV calculations, in what range would the equipment's internal rate of return fall? I don't know IRR is less than 10%. IRR is greater than 10%. IRR is 10%
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