Diane Company buys equipment for $300,000 that will last for 5 years. The equipment will...
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Accounting
Diane Company buys equipment for $300,000 that will last for 5 years. The equipment will generate cash flows of $100,000 per year and will have an estimated salvage value $50,000 at the end of its life. Ignore income taxes. The discount rate for the company is 8%. Compute the net present value of this investment. Present value tables are presented below.
Present value of $1
Periods 8%
1 .926
2 .857
3 .794
4 .735
5 .681
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