Your firm is considering the purchase of a new piece of equipment for $75,000. The...
50.1K
Verified Solution
Link Copied!
Question
Finance
Your firm is considering the purchase of a new piece of equipment for $75,000. The equipment will be straight-line depreciated over four years. The salvage value (final book value) is 10% of the purchase price. The equipment will increase the earnings before interest, tax, and depreciation by $25,000 for each of the 4 years the equipment is used. The tax rate is 21% and the required rate of return is 10%. Should the equipment be purchased?
A) The NPV is -7272.56. No, the equipment should not be purchased.
B) The NPV is 3960.65. Yes, the equipment should be purchased.
C) The NPV is 2884.91. No, the equipment should not be purchased.
Can you please provide excel spreadsheet work & formula?
Answer & Explanation
Solved by verified expert
Get Answers to Unlimited Questions
Join us to gain access to millions of questions and expert answers. Enjoy exclusive benefits tailored just for you!
Membership Benefits:
Unlimited Question Access with detailed Answers
Zin AI - 3 Million Words
10 Dall-E 3 Images
20 Plot Generations
Conversation with Dialogue Memory
No Ads, Ever!
Access to Our Best AI Platform: Flex AI - Your personal assistant for all your inquiries!
