You must calculate the value of a container handling equipment for a terminal, which produces year end annual cash flows of $1,200 the first year, $2,000 the second year, $3,000 the third year, and $4,000 the fourth year. A) Assuming a weighted average cost of capital of 15 percent, what is the value of this equipment using the net present value (NPV) approach? B) If the cost of this equipment is $5,200 for the terminal, calculate the net present value. Would you buy this equipment for your terminal

Cornerstones of Cost Management (Cornerstones Series)
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Chapter19: Capital Investment
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You must calculate the value of a container handling equipment for a terminal, which produces year end annual cash flows of $1,200 the first year, $2,000 the second year, $3,000 the third year, and $4,000 the fourth year.
A) Assuming a weighted average cost of capital of 15 percent, what is the value of this equipment using the net present value (NPV) approach?
B) If the cost of this equipment is $5,200 for the terminal, calculate the net present value. Would you buy this equipment for your terminal?

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