Estimate the new present value and uniform annual cash flow

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Brainger, Inc., is purchasing new production equipment to support its facility expansion. The equipment will cost $175,000 in year zero, and it will generate $122,500 sales revenue in its first year of operation, $132,000 in its second year, and $140,000 in years three through seven. Due to product phase-out, sales revenue will be $135,500 in year 8, $127,500 in year 9, and $125,000 in year 10. Annual operating expenses for the equipment will be $90,000 in its first and second years, and $95,000 in years 3 through 5, $97,500 in year 6, $100,000 in year 7, $105,000 in year 8, and $112,500 in year 9, and $117,500 in year 10. Brainger uses a 14% interest rate for its projects. Set up an Excel spreadsheet and show how the cash flows for this new equipment and estimate the new present value and uniform annual cash flow generated by the equipment using the appropriate Excel financial functions.

Reference no: EM13189857

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