What is the net present value of this piece of equipment

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Reference no: EM132007163

Suppose you are a financial manager considering an investment in a new piece of equipment.

The equipment would require an initial investment of $50,000, and is expected to generate $8,000 in cash flow each year for the company for the next ten years.

After ten years, the equipment is expected to be worthless. If the project cost of capital is 10% compounded annually, then what is the net present value of this piece of equipment and should you invest in it based on the net present value decision rule?

Reference no: EM132007163

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