Question
Sun Company is considering purchasing new equipment costing $350,000. Sun's management has estimated that the equipment will generate cash inflows as follows: Year 1 $100,000
Sun Company is considering purchasing new equipment costing $350,000. Sun's management has estimated that the equipment will generate cash inflows as follows:
| Year 1 | $100,000 |
| Year 2 | $100,000 |
| Year 3 | $125,000 |
| Year 4 | $125,000 |
| Year 5 | $75,000 |
Using the factors in the table below, please calculate the net present value of the net cash inflows above, using a discount rate of 10%. Please round all calculations to the nearest whole dollar.
| Present Value of $1 |
|
|
|
|
| 8% | 9% | 10% |
| 1 | 0.926 | 0.917 | 0.909 |
| 2 | 0.857 | 0.842 | 0.826 |
| 3 | 0.794 | 0.772 | 0.751 |
| 4 | 0.735 | 0.708 | 0.683 |
| 5 | 0.681 | 0.650 | 0.621 |
| A. | $399,325 | |
| B. | $342,800 | |
| C. | $401,667 | |
| D. | $399,761 |
Step by Step Solution
There are 3 Steps involved in it
Step: 1
Get Instant Access to Expert-Tailored Solutions
See step-by-step solutions with expert insights and AI powered tools for academic success
Step: 2
Step: 3
Ace Your Homework with AI
Get the answers you need in no time with our AI-driven, step-by-step assistance
Get Started
Excise Tax Air Transportation IRS Audit Techniques Guide ATG
Authors: Internal Revenue Service
1st Edition
1304112772, 978-1304112774
