You are considering purchasing a new piece of equipment for your factory. The equipment will cost $3,000

Question:

You are considering purchasing a new piece of equipment for your factory. The equipment will cost $3,000 and can be used for three years. If you do purchase it, you will earn $1,100 one year from now, $1,210 two years from now, and $1,331 three years from now. After that, the machine will generate no more earnings and have no resale value.
a. What is the of this investment if the interest rate is 8 percent? 10 percent? 12 percent?
b. What is the highest interest rate at which you would be willing to buy this equipment? Net Present Value
What is NPV? The net present value is an important tool for capital budgeting decision to assess that an investment in a project is worthwhile or not? The net present value of a project is calculated before taking up the investment decision at...