Assume that a company is considering buying a new piece of equipment for $250,000 that would have a useful life of five years and a salvage value of $32,000. The equipment would generate the following estimated annual revenues and expenses: Revenues Less operating expenses: Commissions Insurance Depreciation Maintenance Net operating income $ 120,000 $ 15,000 5,000 43,600 30,000 93,600 $ 26,400 Click here to view Exhibit 14B-1 and Exhibit 14B-2, to determine the appropriate discount factor(s) using the tables provided. Assuming a discount rate of 17%, what is the net present value of this investment? Multiple Choice O O $(11,478) $(150,954) $(128,966) $40,578
Assume that a company is considering buying a new piece of equipment for $250,000 that would have a useful life of five years and a salvage value of $32,000. The equipment would generate the following estimated annual revenues and expenses: Revenues Less operating expenses: Commissions Insurance Depreciation Maintenance Net operating income $ 120,000 $ 15,000 5,000 43,600 30,000 93,600 $ 26,400 Click here to view Exhibit 14B-1 and Exhibit 14B-2, to determine the appropriate discount factor(s) using the tables provided. Assuming a discount rate of 17%, what is the net present value of this investment? Multiple Choice O O $(11,478) $(150,954) $(128,966) $40,578
Chapter1: Financial Statements And Business Decisions
Section: Chapter Questions
Problem 1Q
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Transcribed Image Text:Assume that a company is considering buying a new piece of equipment for $250,000 that would have a useful life of five years and a salvage value of $32,000. The equipment would generate the following
estimated annual revenues and expenses:
Revenues
Less operating expenses:
Commissions
Insurance
Depreciation
Maintenance
Net operating income
$ 120,000
$ 15,000
5,000
43,600
30,000
93,600
$ 26,400
Click here to view Exhibit 14B-1 and Exhibit 14B-2, to determine the appropriate discount factor(s) using the tables provided.
Assuming a discount rate of 17%, what is the net present value of this investment?
Multiple Choice
O
O
$(11,478)
$(150,954)
$(128,966)
$40,578
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