Net present value of the equipment

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Reference no: EM13127820

Kumanu, Inc. is considering investing in new FMS equipment for its factory. This equipment will cost $80,000, is expected to last 6 years, and is expected to have a $10,000 salvage value at the end of 6 years. The new equipment is expected to generate cost savings of $20,000 per year in each of the 6 years. Kumanu's discount rate is 16%. What is the net present value of this equipment?

A. $(2,200)

B. $3,700

C. $20,500

D. $(34,950)

Reference no: EM13127820

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