Full service station is planning to invest in automatic car
Course:- Managerial Accounting
Reference No.:- EM131026977

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Full Service station is planning to invest in automatic car wash equipment valued at 210,000. the owner estimates that the equipment will increase annual net cash inflows by 40,000. the equipment is  expected to have a 10 year useful life with an estimated residual value of 20,000. the company requires at least a 14% minimum rate of return. using the net present value method, prepare an analysis to determine whether the company should purchase the equipment. how important is the estimate of residual value to this decision?

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