Trenton Inc $\begin{array}{cc}\text { Year } & \text { Annual cash flow } \\\hline 1 & \$ 8000 \\2 & \$ 6000 \\3 & \$ 3000\end{array}$

Trenton Inc.is considering an equipment purchase that has a cost of $15 000.The equipment is expected to have a salvage value of $2000 at the end of three years.In addition,the equipment is expected to generate cash flows over the next three years as follows:
$\begin{array}{cc}\text { Year } & \text { Annual cash flow } \\\hline 1 & \$ 8000 \\2 & \$ 6000 \\3 & \$ 3000\end{array}$

If Trenton's cost of capital is equal to 14 per cent,the net present value of the equipment is: (ignore income taxes)

A) $(1340)
B) $ 10
C) $ (357)
D) $ 993

Correct Answer:

Verified

Unlock this answer now
Get Access to more Verified Answers free of charge

Access For Free