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Grady Corp. is considering the purchase of a new piece of equipment. The equipment costs...

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Accounting

Grady Corp. is considering the purchase of a new piece of equipment. The equipment costs $50,100, and will have a salvage value of $5,120 after six years. Using the new piece of equipment will increase Gradys annual cash flows by $6,090. Grady has a hurdle rate of 10%. (Future Value of $1, Present Value of $1, Future Value Annuity of $1, Present Value Annuity of $1.) (Use appropriate factor from the PV tables.)

a. What is the present value of the increase in annual cash flows? (Round your answer to 2 decimal places.) b. What is the present value of the salvage value? (Round your answer to 2 decimal places.) c. What is the net present value of the equipment purchase? (Negative value should be indicated by a minus sign. Round your intermediate calculation and final answer to 2 decimal places.) d. Based on financial factors, should Grady purchase the equipment?

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