Management is considering purchase of equipment costing 109,000 has an estimated life if 3 years...
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Accounting
Management is considering purchase of equipment costing 109,000 has an estimated life if 3 years no salvage value. The net after tax cash flow from the project for each of 3 years is expected to be 45,000. Cost of capital is 10%. What is the net present value of the proposal? The present value of $1 due in 3 years, discounted at 10%, is 0.751, present value if $1 received annually for 3 years, discounted at 10% is 2.487.
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