The Pina Colada Company is planning to purchase $458,000 of equipment with an estimated 7-year life and no estimated salvage value. The company has projected the following annual cash flows for the investment: Projected Cash Year Flows $236,000 2 141,000 3 125,000 55,500 60,400 6 44,800 7 46,900 Total $709,600 Click here to view the factor table. Calculate the net present value of the proposed equipment purchase. Pina Colada uses a 7% discount rate. (For calculation purposes, use 4 decimal places as displayed in the factor table provided and round final answer to O decimal place, eg. 58,971.) Net present value $

FINANCIAL ACCOUNTING
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Author:Libby
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Chapter1: Financial Statements And Business Decisions
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Chapter 9 Question 5

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The Pina Colada Company is planning to purchase $458,000 of equipment with an estimated 7-year life and no estimated salvage
value. The company has projected the following annual cash flows for the investment:
Projected Cash
Year
Flows
1.
$236,000
141,000
3
125,000
4
55,500
5
60,400
6
44,800
7
46,900
Total
$709,600
Click here to view the factor table.
Calculate the net present value of the proposed equipment purchase. Pina Colada uses a 7% discount rate. (For calculation purposes,
use 4 decimal places as displayed in the factor table provided and round final answer to O decimal place, e.g. 58,971.)
Net present value
$
Transcribed Image Text:The Pina Colada Company is planning to purchase $458,000 of equipment with an estimated 7-year life and no estimated salvage value. The company has projected the following annual cash flows for the investment: Projected Cash Year Flows 1. $236,000 141,000 3 125,000 4 55,500 5 60,400 6 44,800 7 46,900 Total $709,600 Click here to view the factor table. Calculate the net present value of the proposed equipment purchase. Pina Colada uses a 7% discount rate. (For calculation purposes, use 4 decimal places as displayed in the factor table provided and round final answer to O decimal place, e.g. 58,971.) Net present value $
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