Spanish Peaks Railroad Inc. is considering acquiring equipment at a cost of $152,000. The equipment has an estimated lifte of 10 years and no residual value. It is expected to provide yearly net cash flows of $38,000. The company's minimum desired rate of return for net present value analysis is 15%. Present Value of an Annuity of $1 at Compound Interest Year 6% 10% 12% 15% 20% 0.833 1.528 0.943 0.909 0.893 0.870 1.833 1.736 1.626 1.690 2.673 2.487 2.402 2.283 2.106 3.465 3.170 3.037 2.855 2.589 4.212 3.791 3.605 3.353 2.991 4.917 4.355 4.111 3.785 3.326
Spanish Peaks Railroad Inc. is considering acquiring equipment at a cost of $152,000. The equipment has an estimated lifte of 10 years and no residual value. It is expected to provide yearly net cash flows of $38,000. The company's minimum desired rate of return for net present value analysis is 15%. Present Value of an Annuity of $1 at Compound Interest Year 6% 10% 12% 15% 20% 0.833 1.528 0.943 0.909 0.893 0.870 1.833 1.736 1.626 1.690 2.673 2.487 2.402 2.283 2.106 3.465 3.170 3.037 2.855 2.589 4.212 3.791 3.605 3.353 2.991 4.917 4.355 4.111 3.785 3.326
Chapter1: Financial Statements And Business Decisions
Section: Chapter Questions
Problem 1Q
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Transcribed Image Text:Spanish Peaks Railroad Inc. is considering acquiring equipment at a cost of $152,000. The equipment has an estimated lifte of 10 years
and no residual value. It is expected to provide yearly net cash flows of $38,000. The company's minimum desired rate of return for net
present value analysis is 15%.
Present Value of an Annuity of $1 at Compound Interest
Year
6%
10%
12%
15%
20%
0.833
1.528
0.943
0.909
0.893
0.870
1.833
1.736
1.626
1.690
2.673
2.487
2.402
2.283
2.106
3.465
3.170
3.037
2.855
2.589
4.212
3.791
3.605
3.353
2.991
4.917
4.355
4.111
3.785
3.326
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