Question: Scoth Corp is contemplating purchasing equipment that would increase sales revenues by $302,000 per year and cash operating expenses by $80,000 per year. The equipment

Scoth Corp is contemplating purchasing equipment that would increase sales revenues by $302,000 per year and cash operating expenses by $80,000 per year. The equipment would cost $600,000 and have a 5 year life with a $75,000 salvage value. The annual depreciation would be $100,000.

Assuming the companys discount rate is 11%, the net present value of the investment is closest to (the factors below for a 11% discount rate can be used to solve this problem):

Periods	Present Value of $1	Present Value of an Annuity of $1
1	0.901	0.901
2	0.812	1.713
3	0.731	2.444
4	0.659	3.102
5	0.593	3.696

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