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What is the equipment net present value

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Q1. A piece of equipment has a cost of $20,000. The equipment will provide cost savings of $3,500 each year for ten years, after which time it will have a salvage value of $2,500. If the company's discount rate is 12%, what is the equipment's net present value? (Ignore income taxes in this problem.)

A. ($225).

B. $580.

C. $2.275.

D. $17,500.

Q2. Parks Company is considering an investment proposal in which a working capital investment of $10,000 would be required. The investment would provide cash inflows of $2,000 per year for six years. The working capital would be released for use elsewhere when the project is completed. If the company's discount rate is 10%, what is the investment's net present value? (Ignore income taxes in this problem.)

A. $1.290.

B. ($1,290).

C. $2,000.

D. $4,350.

Reference no: EM132764756

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