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April 18, 2014

Homework Help: Finance

Posted by Finance Ron on Thursday, October 6, 2011 at 9:13pm.

Cooper construction is considering purchasing new technologically advanced equipment. The equipment will cost $625,000 with a salvage value $50,000 and the end of 10 years. The equipment is expected to general additional annual cash inflows with the following probabilities for the next 10 yrs; Probabililty Cash Flow
.15 $60,000
.25 $85,000
.45 $110,000
.15 $130,000
What is expected Cash flow I got $99,250. Cost of Capital 10%, what is expected net present value? My question is do I multiple $625,000 by present values of .909, .826 .751 each by $625,000 or will this value change?

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