Question
UR Company is considering rebuilding and selling used alternators for automobiles. The company estimates that the net operating cash flows (sales minus cash operating expenses)
UR Company is considering rebuilding and selling used alternators for automobiles. The company estimates that the net operating cash flows (sales minus cash operating expenses) arising from the rebuilding and sale of the used alternators would be as follows (numbers in parentheses indicate an outflow):
Year 1 - 10$90,000Year 11($20,000)Year 12$100,000
In addition to the above net operating cash flows, UR Company would purchase production equipment costing $200,000 now to use in the rebuilding of the alternators. The equipment would have a 12-year life and a $15,000 salvage value. The company's discount rate is 10%. (Ignore income taxes in this problem.)
What is the net present value of ALL cash flows associated with this investment, rounded to the nearest dollar? (Do not round your intermediate calculations.)
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