The company is considering an equipment investment that will cost $950,000. Projected future after tax net cash inflows over the equipment’s three-year life are as follows: year 1: $500,000, Year 2: $400,000 and Year 3: $300,000. Compute the company’s Net present value if their required rate of return is 8%. (Hint: the cash flows are not even, so this is not an annuity.)
The company is considering an equipment investment that will cost $950,000. Projected future after tax net cash inflows over the equipment’s three-year life are as follows: year 1: $500,000, Year 2: $400,000 and Year 3: $300,000. Compute the company’s Net present value if their required rate of return is 8%. (Hint: the cash flows are not even, so this is not an annuity.)
Chapter1: Financial Statements And Business Decisions
Section: Chapter Questions
Problem 1Q
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The company is considering an equipment investment that will cost $950,000. Projected future after
tax net
$400,000 and Year 3: $300,000. Compute the company’s
return
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