Calculate the net present value if edutech ltd continues

Reference no: EM133611961

Question: A year ago, Edutech Ltd bought equipment for $1 mil. The equipment had an expected useful life of 10 years and an estimated value of $100,000 at the end of its life. This equipment currently has a market value of $800,000. A newer equipment can be purchased at $3.8 mil which over its 10-year life, will result in an increase in sales from $1 mil to $1.2 mil per year. The new equipment will also reduce annual operating costs from $500,000 to $400,000. The required rate of return is 10 percent per year. Calculate the Net Present Value if Edutech Ltd continues to operate the old equipment.

Reference no: EM133611961

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