Marquette Innovations Corp. is considering investing in new excavation equipment for their mining business. The investment will require an outlay of $2,000,000 initially, and is expected to generate the following after-tax cash flows: Year 1 $800,000 Year 2 $900,000 Year 3 $400,000 (due to planned repairs) Year 4 $900,000 Year 5 $950,000 (including the disposal value). The company uses a discount rate of 15% What is the Net Present Value of the proposed investment? SHOW YOUR WORK.

FINANCIAL ACCOUNTING
10th Edition
ISBN:9781259964947
Author:Libby
Publisher:Libby
Chapter1: Financial Statements And Business Decisions
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Marquette Innovations Corp. is considering investing in new excavation equipment for their mining business. The investment will require an
outlay of $2,000,000 initially, and is expected to generate the following after-tax cash flows:
Year 1
$800,000
$900,000
$400,000 (due to planned repairs)
$900,000
$950,000 (including the disposal value).
Year 2
Year 3
Year 4
Year 5
The company uses a discount rate of 15%.
What is the Net Present Value of the proposed investment? SHOW YOUR WORK.
Transcribed Image Text:Marquette Innovations Corp. is considering investing in new excavation equipment for their mining business. The investment will require an outlay of $2,000,000 initially, and is expected to generate the following after-tax cash flows: Year 1 $800,000 $900,000 $400,000 (due to planned repairs) $900,000 $950,000 (including the disposal value). Year 2 Year 3 Year 4 Year 5 The company uses a discount rate of 15%. What is the Net Present Value of the proposed investment? SHOW YOUR WORK.
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