Delta Ltd plans to invest for an equipment costing 18,000 to save labour costs....
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Delta Ltd plans to invest for an equipment costing 18,000 to save labour costs. Labour savings would be 9,000 in the first year and labour rates in the second year will increase by 10%. The estimated average annual rate of inflation is 8% and the companys real cost of capital is estimated at 12%. The equipment has a two year life with an estimated actual salvage value of 5,000 receivable at the end of year 2. All cash flows occur at the year end. What is the negative NPV (to the nearest 10 ) of the proposed investment?
options?
a) 50
b) 150
c) 250
d) 270
e) 380
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