Jameson Inc. is considering investing in a new piece of equipment that costs $1,

Question

Jameson Inc. is considering investing in a new piece of equipment that costs $1,000,000. The equipment is expected to generate revenues of $300,000 per year for ten years. The equipment would be depreciated using the straight-line method over its ten year life and have a salvage value of $40,000. The company considers the impact of income taxes in all of its capital investment decisions. The company has a 40 percent income tax rate and desires an after-tax rate of return of 14 percent on its investment. The net present value of the machine is: Answer $147,542 $154,015 $158,330 $258,337

Explanation / Answer

$154,015(right option) net PV

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