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Sansariff Company invests in a new piece of equipment costing $40,000. The equipment is expected to...

Sansariff Company invests in a new piece of equipment costing $40,000. The equipment is expected to yield the following amounts per year for the equipment's four-year useful life: Cash revenues $ 60,000 Cash expenses (32,000) Depreciation expenses (straight-line) (10,000) Income provided from equipment $ 18,000 Cost of capital 14% What is the net present value of this investment in equipment, assuming no taxes are paid?

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Answer #1

121 1 Year Cash flows Present value of cash fow ($40,000 $28,000 $28,000 $28,000 $28,000 ($40,000) $24,561 $21,545 $18,899 $1

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