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How much is annual depreciation

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Question - The Potash Corporation is considering an investment project for which the following data are available:

Cost of equipment need.............$550,000

Estimated annual net income for 10 years............49,000

Cost of overhaul of equipment needed in 6 years............50,000

Salvage value of equipment in 10 years............70,000

Cost of Capital........................10%

1. How much is annual depreciation?

2. How much is net cash inflow?

3. Calculate NPV and make a decision.

4. Should they invest? Why or why not? What is the most they should pay?

Reference no: EM131870173

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