The equipment cost is $50,000 and it would cost another $10,000 to modify it. Assume that the
Fantastic news! We've Found the answer you've been seeking!
Question:
What is the cash flow at time=0?
What are the operating cash flows in Years 1-3?
What is the terminal cash flow in Year 3?
What is the book value of the asset at the end of Year 2?
What is the depreciation expense for Year 2?
Assume the cost of capital is 10%. What are the NPV and IRR of the project? Should the equipment be purchased?
Related Book For
Fundamentals of Financial Management
ISBN: 978-0324272055
10th edition
Authors: Eugene F. Brigham, Joel F. Houston
Posted Date: