Your firm is considering the purchase of a new piece of equipment for $30,000. The equipment will be straight line depreciated over four years. The salvage value (final book value) is $5,000. The equipment will increase the earnings before interest, tax and depreciation by $8000 for each of the four years the equipment is used. The tax rate is 21 percent and the required rate of return is 10 percent.

Options

No. NPV = - 6551.38

No. NPV = - 3108.10

No. NPV = - 2390.93

Formula (if in Excel even better) would be greatly appreciated.