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To improve the service to your customers, you are evaluating the possibility of acquiring a new equipment at an initial cost of $ 28,000. In
To improve the service to your customers, you are evaluating the possibility of acquiring a new equipment at an initial cost of $ 28,000. In addition to the initial cost, the use of the equipment will require an additional investment of $ 4000 in year 5. The equipment will also require an annual maintenance expense of about $ 3000. You estimate that you will use the equipment for 10 years and that at the end of the 10th year you will be able to sell it for $ 3,500 According to his estimates, the acquisition of the equipment should generate an increase in sales of about $ 12,000 per year for the business. If you evaluate your investments at a rate of return of 4.7% per year, would this be a good investment?
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