In Year 1, Darw Inc. purchased equipment with an expected useful life of 5 years. The initial cost of the equipment was $85,000. Darw Inc.cost of capital is 12%. At the time it purchased the equipment, Darw Inc. projected the following cash inflows from use of the equipment:    Year Projected Cash Inflow 1 $20,000 2 $30,000 3 $35,000 4 $25,000 5 $15,000 At the end of Year 5, the equipment had reached the end of its useful life. Darw Inc.determined that it had actually generated the following cash flows:   Year Actual Cash Inflow $10,000 $20,000 $30,000 $30,000 $30,000   2. Calculate the net present value that the equipment achieved, based on the actual cash inflows.

FINANCIAL ACCOUNTING
10th Edition
ISBN:9781259964947
Author:Libby
Publisher:Libby
Chapter1: Financial Statements And Business Decisions
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In Year 1, Darw Inc. purchased equipment with an expected useful life of 5 years. The initial cost of the equipment was $85,000. Darw Inc.cost of capital is 12%. At the time it purchased the equipment, Darw Inc. projected the following cash inflows from use of the equipment: 

  Year Projected Cash Inflow
1 $20,000
2 $30,000
3 $35,000
4 $25,000
5 $15,000

At the end of Year 5, the equipment had reached the end of its useful life. Darw Inc.determined that it had actually generated the following cash flows:

 

Year Actual Cash Inflow
$10,000
$20,000
$30,000
$30,000
$30,000

 

2. Calculate the net present value that the equipment achieved, based on the actual cash inflows.

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