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streetthunder

  • 3 years ago

olden Corporation is considering the purchase of new equipment costing $200,000. The expected life of the equipment is 10 years. It is expected that the new equipment can generate an increase in net income of $35,000 per year for the next 10 years. After-tax After tax Probabilities Net Income Recession .3 (15000) Normal .5 25000 Boom .2 35000 Golden's cost of capital is 14%. What is the expected NPV? Should they purchase the new equipment?

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  1. Dean.Shyy
    • 3 years ago
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    N.P.V. is an acronym for NET PRESENT VALUE. With that said, the higher the NET PRESENT VALUE the better the return. To calculate NET PRESENT VALUE, go here: http://www.investopedia.com/calculator/netpresentvalue.aspx

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