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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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