If the discount rate is 17 the net present value of the

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Delley Inc. is considering the acquisition of equipment that costs $340,000 and has a useful  life of 6 years with no salvage value. The incremental net cash flows that would be generated  by the equipment are:

 

Incremental Net

 

Cash Flows

Year 1

$94,000

Year 2

$133,000

Year 3

$96,000

Year 4

$116,000

Year 5

$115,000

Year 6

$87,000

1. If the discount rate is 17%, the net present value of the investment is closest to:

A) $45,811

B) $385,811

C) $301,000

D) $117,341

2. The payback period of this investment, rounded off to the nearest tenth of a year, is closest to:

A) 3.9 years

B) 3.6 years

C) 3.1 years

D) 5.0 years

Reference no: EM13567223

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