of 7 years and no market value. If the company must earn a 13% annual return on such investments, ho ow for the purchase of this piece of equipment? Draw a cash-flow diagram from the company s viewpoi

EBK CONTEMPORARY FINANCIAL MANAGEMENT
14th Edition
ISBN:9781337514835
Author:MOYER
Publisher:MOYER
Chapter10: Capital Budgeting: Decision Criteria And Real Option
Section10.A: Mutually Exclusive Investments Having Unequal Lives
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pls show solution and cash flow diagram, thanks!

"It is estimated that a certain piece of equipment can save $23115 per year in labor and materials costs. The equipment has an
expected life of 7 years and no market value. If the company must earn a 13% annual return on such investments, how much could
be justified now for the purchase of this piece of equipment? Draw a cash-flow diagram from the company s viewpoint."
60853.85
B) 102228.64
122443.38
D
166593.37
E) 120809.23
Transcribed Image Text:"It is estimated that a certain piece of equipment can save $23115 per year in labor and materials costs. The equipment has an expected life of 7 years and no market value. If the company must earn a 13% annual return on such investments, how much could be justified now for the purchase of this piece of equipment? Draw a cash-flow diagram from the company s viewpoint." 60853.85 B) 102228.64 122443.38 D 166593.37 E) 120809.23
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