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You have an opportunity to buy a new piece of diagnostic equipment for the following terms: price including installation: $1,285,000; expected useful life: 5 years
You have an opportunity to buy a new piece of diagnostic equipment for the following terms: price including installation: $1,285,000; expected useful life: 5 years with straight-line depreciation; cost of capital for the practice is 12%.According to financial projections, each year will look something like this:
Projections ($000s)
Start | 1 | 2 | 3 | 4 | 5 | 6 | Total |
Cash inflows | 328 | 450 | 525 | 760 | 620 | 2,683 | |
Cash outflows | 1,285 | 105 | 138 | 155 | 200 | 170 | 2,053 |
Net cash flows | -1,285 | 223 | 312 | 370 | 560 | 450 | 630 |
What is the NPV of this decision?
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