Newport Corp is considering the purchase of a new plece of equipment. The cost s

Question

Newport Corp is considering the purchase of a new plece of equipment. The cost savings from the equipment would result in an annual Increase in cash flow of $202,000. The equipment will have an initial cost of $961,000 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) (Round your PV factor to 4 decimal places and final answer to the nearest dollar amount) : S12 O positive $320,333 zero O negative $27174 O positive $27174

Explanation / Answer

Calculate net present value :

Net present value = Present value of cash inflow-Present value of cash outflow

= (202000*4.6229)-961000

Net present value = (27174)

So answer is c) Negative $27174

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