Question
Superior Printing is considering a capital investment for a new printing press with a ten-year life. Superiors cost of capital is 10%. Relevant cash flows
Superior Printing is considering a capital investment for a new printing press with a ten-year life. Superiors cost of capital is 10%. Relevant cash flows and related present value factors are as follows: Investment in printing press = $240,000. Investment in working capital items = $10,000 Annual net cash inflow from operating the press = $40,000. Salvage value of the press = $18,000. Present value of $1 (10 Years @ 10%) = 0.3855 Present value of an annuity of $1 (10 Years @ 10%) = 6.1446 The present value of the salvage value from the press is: A) $5,378 B) $6,939 C) $15,420 D) $244,584
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