Grady Corp. is considering the purchase of a new piece of equipment. The equipment costs $51,500, and will have a salvage value of $5,040 after six years. Using the new piece of equipment will increase Grady's annual cash flows by $6,190. Grady has a hurdle rate of 12%. (Future Value of $1, Present Value of $1, Future Value Annuity of $1, Present Value Annuity of $1.) (Use appropriate factor from the PV tables.) a. What is the present value of the increase in annual cash flows? (Round your answer to 2 decimal places.) b. What is the present value of the salvage value? (Round your answer to 2 decimal places.) c. What is the net present value of the equipment purchase? (Negative value should be indicated by a minus sign. Round your intermediate calculation and final answer to 2 decimal places.) d. Based on financial factors, should Grady purchase the equipment? Yes No
Answers (1)
Know the Answer?
Not Sure About the Answer?
Get an answer to your question ✅ “Grady Corp. is considering the purchase of a new piece of equipment. The equipment costs $51,500, and will have a salvage value of $5,040 ...” in 📙 Business if there is no answer or all answers are wrong, use a search bar and try to find the answer among similar questions.
Search for Other Answers
You Might be Interested in
Billy's is currently an all equity firm that has 115000 shares of stock outstanding at a market price of $36.22 a share. The firm has decided to leverage its operations by issuing $100000 of debt at an interest rate of 9.6 percent.
Answers (1)
Macroeconomic policy will be needed to address rising inflation. B There is sufficient aggregate demand to cause inflationary pressures. C The equilibrium in the economy is at a level of output above full employment.
Answers (1)
Which type of justice reflects the perceived fairness of how resources and rewards are distributed or allocated, according to equity theory?
Answers (1)
Which of the following is true? A. The supply-and-demand model is appropriate for analysis under certain conditions. B. The supply-and-demand model always applies in goods markets, but only sometimes applies in service markets. C.
Answers (1)
Guardrails should be installed along all open sides and ends of scaffolding before use. A. False B. True
Answers (1)
New Questions in Business
If a firm increases its sales and cost of goods sold while holding its inventories constant, then, other things held constant, its inventory turnover ratio will decrease. b.
Answers (1)
Which of the following is a disadvantage of the sole proprietorship form of ownership
Answers (2)
Products that are essential for life, such as water or groceries, yield more marginal utility than rare products, such as diamonds or luxury vehicles. A. True B. False.
Answers (1)
Copy Center pays an average wage of $12 per hour to employees for printing and copying jobs, and allocates $18 of overhead for each employee hour worked. Materials are assigned to each job according to actual cost.
Answers (1)
Which of the following is true of internal recruiting? a. It increases recruitment time and costs. b. It targets job applicants that do not currently work for the organization. c. It improves employee commitment and morale. d.
Answers (2)