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Compute the net present value assuming the company

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Reference no: EM132524109

The Classroom Furniture Company is considering an investment in automated, robotic equipment to make wheels for all of the tables and chairs it manufactures.

The following information is available about the automated, robotic wheel maker:

Initial Cost $200,000

Annual Cash Savings $45,000

Cost to rebuild, end of year 5 $37,500

Salvage value, end of year 8 $12,750

Estimated useful life 8 years

Question 1: Compute the net present value assuming the company's cost of capital is 7%. Show your calculations below and indicate whether or not The Classroom Furniture Company should invest in the equipment.

Reference no: EM132524109

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