Question

16. Sarbanes PLC is considering expanding a production line. The new equipment for the line will cost S1,565,000. In addition

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Answer #1

Initial Investment = 1,565,000 + 115,000 = $1,680,000

Interest Rate = 10.79%

So,

Using TVM Calculation,

CF0 = 1,680,000

CF1 = 365,000

CF2 = 480,000

CF3 = 590,000

CF4 = 760,000 + 115,000 = 875,000

I = 0.1079

CPT NPV,

NPV = $55,142

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