Asked by Islam Soliman on Jul 22, 2024

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A company is considering the purchase of new equipment for $45,000. The projected after-tax net income is $3,000 after deducting $15,000 of depreciation. The machine has a useful life of 3 years and no salvage value. Management of the company requires a 12% return on investment. The present value of an annuity of 1 for various periods follows:
What is the net present value of this machine assuming all cash flows occur at year-end?
A company is considering the purchase of new equipment for $45,000. The projected after-tax net income is $3,000 after deducting $15,000 of depreciation. The machine has a useful life of 3 years and no salvage value. Management of the company requires a 12% return on investment. The present value of an annuity of 1 for various periods follows: What is the net present value of this machine assuming all cash flows occur at year-end?

Return On Investment

A measure used to evaluate the efficiency or profitability of an investment, calculated by dividing the net profit by the cost of the investment.

  • assimilate and implement net present value (NPV) along with the principles of investment selection in deciding on investment projects.
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SM
Subaani MathyJul 25, 2024
Final Answer :
*Annual cash flows = $3,000 + $15,000 = $18,000
*Annual cash flows = $3,000 + $15,000 = $18,000