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You are reviewing a proposal to purchase new equipment. The upfront cost of equipment is $220,000. If purchased, annual cash flows would increase by $85,000
You are reviewing a proposal to purchase new equipment. The upfront cost of equipment is $220,000. If purchased, annual cash flows would increase by $85,000 for the first 3 years and $70,000 a year for years 4 and 5. At the end of five years, the equipment will be sold for $12,500, increasing the annual cash flow for year five to $82,500. If the companys weighted average cost of capital is 14.2%, calculate the net present value for the proposal.
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