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What is the net present value investment for weston ltd

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Reference no: EM132809840

Problem 1: Weston Ltd. is considering investing in a new piece of equipment for its factory. It estimates that the machine will generate an additional $120,000 per year in revenues. The contribution margin on these incremental revenues is estimated at 40%. Incremental annual fixed costs are estimated to be $8,200. The equipment would have a salvage value of $14,000 at the end of 6 years. The company's required rate of return is 13%. What is the net present value of this investment if the equipment costs $250,000? (Ignore income taxes.)

A $11,768

B $204,803

C ($84,173)

D $2,800

E ($51,393)

Reference no: EM132809840

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