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5) Burgess Corporation is considering purchasing equipment that costs $235,000. The equipment has an estimated...

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Accounting

5) Burgess Corporation is considering purchasing equipment that costs $235,000. The equipment has an estimated useful life of 5 years and no salvage value. Burgess believes that the annual cash inflows from using the equipment will be $65,000. (PV of $1 and PVA of $1) Note: Use appropriate factor(s) from the tables provided. Required: a. Calculate the net present value of the equipment assuming that Burgess's cost of capital is 12%. Is the equipment an acceptable investment? b. Calculate the net present value of the equipment assuming that Burgess's cost of capital is 10%. Is the equipment an acceptable investment? c. Based on your results to parts a and b, estimate the internal rate of return for the investment in the equipment. +

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