February 19, 2017

Homework Help: accounting

Posted by jim1 on Friday, March 11, 2011 at 11:54pm.

Jackson Company invests in a new piece of equipment costing $40,000. The equipment is expected to yield the following amounts per year for the equipment's four-year useful life:
Cash revenues $ 60,000
Cash expenses (32,000)
Depreciation expenses (straight-line) (10,000)
Income provided from equipment $ 18,000

Cost of capital 14%

What is the net present value of this investment in equipment, assuming no taxes are paid?

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