Logo
Home Study Material Contact Search
AI Chat FREE
  1. business
  2. accounting
  3. equipment. after-tax cash inflows for the two comp

equipment. After-tax cash inflows for the two competing projects are as follows: Year Puro Equipment...

70.2K

Verified Solution

Question

Accounting

image

equipment. After-tax cash inflows for the two competing projects are as follows: Year Puro Equipment Briggs Equipment - $320,000 $120,000 N 280,000 120,000 m 240,000 320,000 160,000 400,000 120,000 440,000 Both projects require an initial investment of $560,000. In both cases, assume that the equipment has a life of 5 years with no salvage value. Required: Round present value calculations and your final answers to the nearest dollar. 1. Assuming a discount rate of 8%, compute the net present value of each piece of equipment. Puro equipment: $ 366,146 Briggs equipment: $ 501,487 2. A third option has surfaced for equipment purchased from an out-of-state supplier. The cost is also $560,000, but this equipment will produce even cash flows over its 5-year life. What must the annual cash flow be for this equipment to be selected over the other two? Assume a 8% discount rate. $ 265,856 per year

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!
Become a Member

Other questions asked by students