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SolutionforWatsonSportingGoods

# SolutionforWatsonSportingGoods - NPV = \$358,678.98 \$320,000...

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Solution for Watsons Sporting Goods   go to problem NPV = PV of cash flows - initial investment  The initial investment = \$320,000  We are given the cash flows over the life of the equipment. We discount these cash flows and sum them to get the PV of  cash flows.  The PV of cash flows is \$358,678.98 (please see the attached file)
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Unformatted text preview: NPV = \$358,678.98 - \$320,000 = \$38,678.98 Since the NPV is positive, the equipment can be purchased. The NPV calculation uses the cash flows. Since the cash flows are already provided, the depreciation amount and the tax rate are not relevant for the calculation....
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