Cooper construction is considering purchasing new technologically advanced equipment. The equipment will cost $625,000 with a salvage value $50,000 and the end of 10 years. The equipment is expected to general additional annual cash inflows with the following probabilities for the next 10 yrs; Probabililty Cash Flow

Question

Cooper construction is considering purchasing new technologically advanced equipment.  The equipment will cost $625,000 with a salvage value $50,000 and the end of 10 years. The equipment is expected to general additional annual cash inflows with the following probabilities for the next 10 yrs; Probabililty  Cash Flow
                 .15       $60,000
                 .25       $85,000
                 .45      $110,000
                 .15      $130,000
What is expected Cash flow I got $99,250.  Cost of Capital 10%, what is expected net present value?  My question is do I multiple $625,000 by  present values of .909, .826 .751 each by $625,000 or will this value change?

ashley · Answer

99250