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A company is considering new equipment that will cost $20,000. The equipment will increase capacity...

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Accounting

A company is considering new equipment that will cost $20,000. The equipment will increase capacity and increase contribution margin $4,000 per year through increased sales. The equipment has a 5-year life and a $1,000 salvage value. The company uses a 10% desired return on investment. What is the net present value of this proposed investment (slight differences due to rounding are possible)? Use the TVM Calculation Template in Excel to calculate.

Multiple Choice

  • $2,200

  • $0

  • ($1,210)

  • ($4,220)

Answer & Explanation Solved by verified expert
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