Epsilon Enterprises is contemplating the purchase of a new piece of equipment that costs INR...
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Accounting
Epsilon Enterprises is contemplating the purchase of a new piece of equipment that costs INR 300,000. The equipment is expected to produce the following cash flows:
Year | Cash Flows |
Initial Investment | (300,000) |
1 | 80,000 |
2 | 90,000 |
3 | 100,000 |
4 | 110,000 |
Requirements: a. Compute the payback period. b. Calculate the NPV of the investment if the discount rate is 10%. c. Should Epsilon Enterprises proceed with the purchase? Justify your answer using the NPV rule.
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