Asked by Islam Soliman on Jul 22, 2024
Verified
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.
Verified Answer
SM
Learning Objectives
- assimilate and implement net present value (NPV) along with the principles of investment selection in deciding on investment projects.
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