Connor Company is considering purchasing new equipment for $160,000. The expected life of the equipment...
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Accounting
Connor Company is considering purchasing new equipment for $160,000. The expected life of the equipment is 10 years with no residual value. The equipment is expected to generate revenues of $9S,000 per year. Total expenses, including depreciation calculated using the straight-line method), are expected to be $80,000 per year. Connor management has set a minimum acceptable rate of return of 15%. a. Determine the equal annual net cash flows from operating the equipment. b. Calculate the net present value of the new equipment. Use the present value of an annuity of $1 table below. If required, round to the nearest dollar. If the net present value is negative, enter the amount using a minus sign. Annual net cash flow $ Present value of cash flows from equipment $ Less cost of equipment $ Net present of equipment $
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