Compute the net present value of a capital project

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Compute the net present value of a capital project to buy new equipment for replacing old equipment, given the following data and a minimum return of 7% Ignore income taxes.

 

Old equipment

New equipment

Purchase price

$155 000

$132 000

Accumulated depreciation

7 200

0

Remaining useful life (years)

9

9

Current salvage value

48 000

0

Salvage value in 9 years

20 000

19 000

Annual operating costs

17 000

1 000

Reference no: EM133071792

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