Question

20. Lawrence Corp. is considering the purchase of a new piece of equipment. When discounted at a hurdle rate of 8%, the project has a net present value of $24,580. When discounted at a hurdle rate of 10%, the project has a net present value of ($28,940). The internal rate of return of the project is:

22. Hawk Sporting Goods is a manufacturer of falconry equipment. Hawk is analyzing the purchase of a new piece of equipment. The cost savings from the equipment would result in an annual increase in cash flow of $203,000. The equipment will have an initial cost of $908,000 and have a 6-year life. There is no salvage value for the equipment. If the hurdle rate is 8%, what is the approximate net present value? Ignore income taxes. (Future Value of $1, Present Value of $1, Future Value Annuity of $1, Present Value Annuity of $1.) (Use appropriate factor from the PV tables. Round your final answer to the nearest dollar amount.)

Answer 1

Question No.20 Image Attached

Question No.22
Cash Flows	Amount ($)	Year	PVF @8%	Present Value ($)
Cost of Equipment	-908,000.00	0	1.00	-908,000.00
Annual Increase in Cash Inflows	203,000.00	1-6	4.62	937,860.00
Net Present Value	29,860.00
Conclusion :- Purchase new piece of equipment due to postive Net Present Value will be beneficial decision.