Darius is the financial advisor for his company and is considering the purchase of excavation equipment which will cost $54,000. The purchase of this equipment is expected to save his company $5,802 at the end of every year for 10 years. At the end of the 10 years, he expects the excavation equipment to have a residual (inflow) value of $20,000. The company requires a 6% rate of return. Round PV to the nearest cent. Round NPV to the nearest whole number. 1) What is the Net Present Value (NPV) of this equipment investment? Cash Inflows Cash Inflows P/Y = C/Y = N = I/Y = PV = PMT= FV = Payments (Savings) पी SA % Residual (Inflow) SA SA SA % (If the NPV is negative, enter it as a negative number. If the NPV is zero, enter 0.)
Darius is the financial advisor for his company and is considering the purchase of excavation equipment which will cost $54,000. The purchase of this equipment is expected to save his company $5,802 at the end of every year for 10 years. At the end of the 10 years, he expects the excavation equipment to have a residual (inflow) value of $20,000. The company requires a 6% rate of return. Round PV to the nearest cent. Round NPV to the nearest whole number. 1) What is the Net Present Value (NPV) of this equipment investment? Cash Inflows Cash Inflows P/Y = C/Y = N = I/Y = PV = PMT= FV = Payments (Savings) पी SA % Residual (Inflow) SA SA SA % (If the NPV is negative, enter it as a negative number. If the NPV is zero, enter 0.)
Chapter11: Capital Budgeting Decisions
Section: Chapter Questions
Problem 5PB: Mason, Inc., is considering the purchase of a patent that has a cost of $85000 and an estimated...
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Transcribed Image Text:Darius is the financial advisor for his company and is considering the purchase of
excavation equipment which will cost $54,000.
The purchase of this equipment is expected to save his company $5,802 at the end of
every year for 10 years.
At the end of the 10 years, he expects the excavation equipment to have a residual
(inflow) value of $20,000. The company requires a 6% rate of return.
Round PV to the nearest cent. Round NPV to the nearest whole number.
1) What is the Net Present Value (NPV) of this equipment investment?
Cash Inflows
Cash Inflows
P/Y =
C/Y =
N =
I/Y =
PV =
PMT=
FV =
Payments (Savings)
A
$
$
%
Residual (Inflow)
A
GA
A
%
(If the NPV is negative, enter it as a negative number. If the NPV is zero, enter 0.)
Transcribed Image Text:(If the NPV is negative, enter it as a negative number. If the NPV is zero, enter 0.)
NPV = $
2) Should this equipment purchase be made according to the NPV criterion?
Yes
Ο No
(round to the nearest whole number)
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