Weston Ltd. is considering investing in a new piece of equipment for its factory. It...
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Weston Ltd. is considering investing in a new piece of equipment for its factory. It estimates that the machine will generate an additional $120,000 per year in revenues. The contribution margin on these incremental revenues is estimated at 40%. Incremental annual fixed costs are estimated to be $8,200. The equipment would have a salvage value of $14,000 at the end of 6 years. The company's required rate of return is 13%. What is the net present value of this investment if the equipment costs $250,000? (Ignore income taxes.) A) $2,800 B) ($51,393) C) $204,803 D) $11,768 E) ($84,173) Slide # 8
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