22. Guard Company invests in a new piece of equipment costing $40,000. The equipment is expected to yield the following amounts per year for the equipment's 4-year useful life:
Cash Revenues $60,000
Cash Expenses $32,000
Depreciation Expense (Straight Line) $10,000
Income Provided from Equipment $18,000
In the current interest rate environment, the present value factor of one dollar received over a four-year period is 3.000. What is the net present value for the equipment?
I will ignore taxes.
The cash flow annuity is $60,000 - $32,000 = $28,000 x PV ...
The expert examines a Guard Company invested in a new piece of equipment costing.