Bowman Corporation is considering an investment in special-purpose equipment to enable the company to obtain a four-year government contract for the manufacture of a special item. The equipment costs $95,000 and would have no salvage value when the contract expires at the end of the four years. Estimated annual operating results of the project are as follows.
Revenue from contract sales
$
306,000
Expenses other than depreciation
211,000
Depreciation (straight-line basis)
23,750
234,750
Increase in net income from contract work
71,250
Given the above stated information, how would I solve for the net present value of the proposal to undertake contract work, discounted at annual rate of 8%?
Already registered? Login
Not Account? Sign up
Enter your email address to reset your password
Back to Login? Click here