Treble Company is considering the purchase of a new equipment for $400,000. The

Question

Treble Company is considering the purchase of a new equipment for $400,000. The equipment has no salvage value and net cash inflows for four years are:
Year 1: $100,000 Year 2: 150,000 Year 3: 200,000 Year 4: 150,000
Treble company's discount rate is 8%. Interest (discount) factors of present value for $1 for years 1 through 4 are 0.926, 0.857, 0.794, and 0.735. The net present value for this equipment is
A. $90,200 B. 40,200 C. 26,950 D. 126,950 Treble Company is considering the purchase of a new equipment for $400,000. The equipment has no salvage value and net cash inflows for four years are:
Year 1: $100,000 Year 2: 150,000 Year 3: 200,000 Year 4: 150,000
Treble company's discount rate is 8%. Interest (discount) factors of present value for $1 for years 1 through 4 are 0.926, 0.857, 0.794, and 0.735. The net present value for this equipment is
A. $90,200 B. 40,200 C. 26,950 D. 126,950
Year 1: $100,000 Year 2: 150,000 Year 3: 200,000 Year 4: 150,000
Treble company's discount rate is 8%. Interest (discount) factors of present value for $1 for years 1 through 4 are 0.926, 0.857, 0.794, and 0.735. The net present value for this equipment is
A. $90,200 B. 40,200 C. 26,950 D. 126,950

Explanation / Answer

Present value of cash inflow = (.926 * 100000)+(.857*150000)+(.794*200000)+(.735* 150000)

                                        = 92600+ 128550+ 158800+ 110250

                                        = 490200

NPV = 490200- 400000 = 90200

CORRECT OPTION IS a""

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