Question: Refer to the data in PE 23-4. J.H. expects the new investment will generate revenues of $24,000 per year for the five years of the

Refer to the data in PE 23-4. J.H. expects the new investment will generate revenues of $24,000 per year for the five years of the investment’s life. At the end of the four years, the company expects the investment to have a salvage value of $20,000. What is the present value of cash inflows related to this investment? Should J.H. make this investment?

Data from PE 23-4

J.H. Physical Therapy Equipment, Inc., is deciding whether to invest in a certain capital investment. Th e investment requires an initial outlay of $55,000 and annual payments of $12,000 made at the end of the year for five years. J.H.’s discount rate is 14%. What is the present value of cash outflows related to this investment?

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