Multiple Choice Question 106 Tamarisk, Inc. is considering purchasing equipment

Question

Multiple Choice Question 106 Tamarisk, Inc. is considering purchasing equipment costing $48000 with a 6-year useful life. The equipment will provide annual cost savings of $13600 and will be depreciated straight-line over its useful life with no salvage value. Tamarisk requires a 10% rate of return. Present Value of an Annuity of 1 6 4.623 4.486 4.355 4.231 4. 3.784 What is the approximate net present value of this investment? $33600 $11228 $9541 O $13010 Click if you would like to Show Work for this question: Open Show Work Question Attempts: 0 of 1 used SAVE FOR LATER SUBMIT ANSWER 0na018

Explanation / Answer

Present value of inflows=$13600*Present value of annuity factor(10%,6)

=$13600*4.355

=$59228

NPV=Present value of inflows-Present value of outflows

=$59228-$48000

=$11228(Approx).

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