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Sticky Sam buys a piece of equipment for $61,400 that has a useful life of 4...

Sticky Sam buys a piece of equipment for $61,400 that has a useful life of 4 years. The equipment will generate operating cash flows of $18,550 per year and will have no salvage value at end of expected life. The income tax rate is 30%. Straight line depreciation is used. What is the net present value using a 6% required rate of return?
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Answer #1

Net present value of cash flows is =-$448.80 or -$449(approximately).

For any clarification, please comment.

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