Elsie Moving Company is considering purchasing new equipment that costs $724,000

Question

Elsie Moving Company is considering purchasing new equipment that costs $724,000. 1ts management estimates that d the equipment will generate cash flows as follows: Year 1 $212,000 2 212,000 3 260,000 4 260,000 5 158,000 The company's required rate of return is 10%. Using the factors in the table below, calculate the present value of the cash inflows, (Round all calculations to the nearest whole dollar.) Present value of $1: 6% 7% 8% 9% 10% 0943 0.935 0926 091 009 0.890 0.873 0.857 0842 0.826 0.840 0.8160.94 0.772 0.251 0.792 07630.735 0.7080.683 0470.7130.6810.6500.621

Explanation / Answer

Year Cash flows PV factor Present value 1 212000 0.909 192708 2 212000 0.826 175112 3 260000 0.751 195260 4 260000 0.683 177580 5 158000 0.621 98118 Total present value 838778 Option C is correct

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