Jackson Company invests in a new piece of equipment costing $40,000. The equipment is expected to yield the following amounts per year for the equipment's four-year useful life:
Cash revenues $ 60,000
Cash expenses (32,000)
Depreciation expenses (straight-line) (10,000)
Income provided from equipment $ 18,000
Cost of capital 14%
What is the net present value of this investment in equipment, assuming no taxes are paid?
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1 answer