What is the approximate net present value

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Reference no: EM13823904

Du Monde Corp is considering the purchase of a new piece of equipment. The cost savings from the equipment would result in an annual increase in cash flow of $100,000. The equipment will have an initial cost of $400,000 and have a 5 year life. The salvage value of the equipment is estimated to be $75,000. If the hurdle rate is 15%, what is the approximate net present value? Ignore income taxes.

a. Negative $27,490

b. Zero

c. Positive $400,000

d. Positive $75,000

Reference no: EM13823904

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