Your organization is considering investing $200,000 in a new piece of equipment that will allow for the production of a new product line. This product line is anticipated to result in the following cash flows for the next 8 years (the useful life of the equipment):

Year 1: -18,000

Year 2: -5,000

Year 3: 34,000

Year 4: 47,000

Year 5: 62,000

Year 6: 84,000

Year 7: 110,000

Year 8: 81,000

If the organization requires an 8% rate of return, what is the PV of this potential investment? In other words, how much might the organization gain in today’s dollars if they pursue production of this new product line?

Answer rating: 100% (QA)

To calculate the present value PV of this potential investment you can use the formula f... View the full answer