Blender Inc. purchased a new piece of equipment that cost $120,000. The equipment will be used for 10 years and will have a salvage value of $10,000. The annual operating cash inflows will be $45,000, and the annual operating cash outflows will be $30,000. The tax rate is 21%, and the company requires an after-tax rate of return of 8%. Calculate the net present value (NPV) of the equipment. a. $73,051 b. $(20,353) c. $68,419 d. ($17,384) I got C wrong, and B is supposed to be correct, but I need help solving the problem.
Blender Inc. purchased a new piece of equipment that cost $120,000. The equipment will be used for 10 years and will have a salvage value of $10,000. The annual operating cash inflows will be $45,000, and the annual operating cash outflows will be $30,000. The tax rate is 21%, and the company requires an after-tax rate of return of 8%. Calculate the net present value (NPV) of the equipment. a. $73,051 b. $(20,353) c. $68,419 d. ($17,384) I got C wrong, and B is supposed to be correct, but I need help solving the problem.
Chapter1: Financial Statements And Business Decisions
Section: Chapter Questions
Problem 1Q
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Transcribed Image Text:Blender Inc. purchased a new piece of equipment that cost $120,000. The equipment will be used for 10 years and will
have a salvage value of $10,000. The annual operating cash inflows will be $45,000, and the annual operating cash
outflows will be $30,000. The tax rate is 21%, and the company requires an after-tax rate of return of 8%. Calculate the net
present value (NPV) of the equipment.
a. $73,051 b. $(20,353) c. $68,419 d. ($17,384)
I got C wrong, and B is supposed to be correct, but I need help solving the problem.
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