chabelo
Nov 20, 2006, 12:15 AM
Your company plans to acquire one of two assets. Asset A costs $162,500, and has expected annual cash savings of $37,500. Asset B costs $225,000, and has expected annual cash savings of $77,500. You'll use straight-line depreciation for both assets over their estimated useful lives of 5 years, after which both will have a salvage value of zero. Your minimum desired rate of return is 14%, and the present value factor is 3.4331.
Ignoring income taxes, calculate the net present value for both assets.
Ignoring income taxes, calculate the net present value for both assets.