Question: Noway Jose Communications Inc is considering the purchase of a new

Noway Jose Communications, Inc., is considering the purchase of a new piece of computerized data transmission equipment. Estimated annual net cash inflows for the new equipment are $590,000. The equipment costs $2 million, it has a five-year life, and it will have no residual value at the end of the five years. The company has a minimum rate of return of 12 percent. Compute the net present value of the piece of equipment. Should the company purchase it?

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  • CreatedFebruary 21, 2013
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