Hello, Cowboy recording studio is considering the investment of $142,700 in a new recording equipment. It is estimated that the new equipment will generate additional cash flow of $21,000 per year for each year of its 7-year life and will have a salvage value of $13,500 at the end of its life. Cowboy's financial managers estimate that the firm's cost of capital is 8%. (Use the appropriate factor(s) from the tables provided (present value and annuity tables were given). Round the PV factors to 4 decimal places). Question a. Calculate the net present value of the investment. Negative numbers need a minus sign, do not round intermediate calculations. Net present value: ??? Question b. Calculate the present value ratio of the investment. Round your answer to 2 decimal places. Present value ratio: ??? thanks...
Hello,
Cowboy recording studio is considering the investment of $142,700 in a new recording equipment. It is estimated that the new equipment will generate additional cash flow of $21,000 per year for each year of its 7-year life and will have a salvage value of $13,500 at the end of its life. Cowboy's financial managers estimate that the firm's cost of capital is 8%. (Use the appropriate factor(s) from the tables provided (present value and annuity tables were given). Round the PV factors to 4 decimal places).
Question a. Calculate the
Net present value: ???
Question b. Calculate the present value ratio of the investment. Round your answer to 2 decimal places.
Present value ratio: ???
thanks...
Trending now
This is a popular solution!
Step by step
Solved in 6 steps with 5 images
