Darius is the financial advisor for his company and is considering the purchase ofexcavation equipment which will cost $54,000.The purchase of this equipment is expected to save his company $5,802 at the end ofevery year for 10 years.At the end of the 10 years, he expects the excavation equipment to have a residual(inflow) value of $20,000. The company requires a 6% rate of return.Round PV to the nearest cent. Round NPV to the nearest whole number.1) What is the Net Present Value (NPV) of this equipment investment?Cash InflowsCash InflowsP/Y =C/Y =N =I/Y =PV =PMT=FV =Payments (Savings)A$$%Residual (Inflow)AGAA%(If the NPV is negative, enter it as a negative number. If the NPV is zero, enter 0.) (If the NPV is negative, enter it as a negative number. If the NPV is zero, enter 0.)NPV = $2) Should this equipment purchase be made according to the NPV criterion?YesΟ No(round to the nearest whole number)Submit Question

An investment opportunity's whole value is intended to be captured by the financial term known as…

Answered: Darius is the financial advisor for his…

Essentials Of Investments

11th Edition

ISBN:9781260013924

Author:Bodie, Zvi, Kane, Alex, MARCUS, Alan J.

Publisher:Bodie, Zvi, Kane, Alex, MARCUS, Alan J.

Chapter1: Investments: Background And Issues

Section: Chapter Questions

Problem 1PS

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