Rent-to-Own Equipment Co. is considering a new inventory system that will cost $

Question

Rent-to-Own Equipment Co. is considering a new inventory system that will cost $450,000. The system is expected to generate positive cash flows over the next four years in the amounts of $250,000 in year one, $125,000 in year two, $110,000 in year three, and $80,000 in year four. Rent-to-Own's required rate of return is 10%. What is the net present value of this project? Answer $34,773 $115,000 $45,328 $87,340 Rent-to-Own Equipment Co. is considering a new inventory system that will cost $450,000. The system is expected to generate positive cash flows over the next four years in the amounts of $250,000 in year one, $125,000 in year two, $110,000 in year three, and $80,000 in year four. Rent-to-Own's required rate of return is 10%. What is the net present value of this project? Rent-to-Own Equipment Co. is considering a new inventory system that will cost $450,000. The system is expected to generate positive cash flows over the next four years in the amounts of $250,000 in year one, $125,000 in year two, $110,000 in year three, and $80,000 in year four. Rent-to-Own's required rate of return is 10%. What is the net present value of this project? $34,773 $115,000 $45,328 $87,340 $34,773 $115,000 $45,328 $87,340

Explanation / Answer

Npv = 250000/1.1 + 125000/1.1^2. + 110000/1.1^3 + 80000/1.1^4 - 450000 = 34773

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