Question

A company is considering the purchase of a piece of equipment that would cost $380,000 and would last for 8 years. At the end of 8 years, the equipment would have a salvage value of $97,500. The equipment would provide annual cost savings of $85,000. The company requires a minimum pretax return of 12% on all investment projects. (Ignore income taxes.)

Required:

Provide your Excel input and the final net present value amount you calculated. (If a variable is not used in the calculation, input a zero (0). Omit the "$" and "%" signs in your response.) Round your answer to the nearest dollar and use a minus sign for negative numbers. Excel input: Rate %   Nper   PMT $   PV $   FV $ Net Present Value (NPV) $

Required:

Input the required variables and the computed internal rate of return. (If a variable is not used in the calculation, input a zero (0). Omit the "$" and "%" signs in your response.) Round your answer to one decimal place and use a minus sign for negative numbers.

Excel input:

Rate

%

Nper

PMT

$

PV

$

FV

$

Internal Rate of Return (IRR)

%

Answer 1