Question

An agricultural accounting firm is considering leasing several new copy machines. Annual lease payments of $14,000...

An agricultural accounting firm is considering leasing several new copy machines. Annual lease payments of $14,000 would be made at the end of each year, including the first. Annual operating expenses would be $3,000 each year. $18,000 in cash inflows each year would be attributed to the copiers. Given a cost of capital of 5%, what is the approximate net present value of this investment? (This is over the course of five years)

a.

$3,877
b.

-$3,877
c.

-$4,329
d.

$4,329
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Answer #1

Ans d. $ 4329

Given a cost of capital of 5%, the approximate net present value of this investment is $ 4329

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