(Answered) Melinda corp buys equipment for 75000 that will last for 5

Accounting

Melinda Corp buys equipment for $75,000 that will last for 5 years. The equipment will generate cash flows of $24,000 per year and will have no salvage value at the end of its life. Ignore taxes. Use 12% required rate of return.

Required

(a) What is the present value (PV) of this investment at 12%?

(b) What is the net present value (NPV) of this investment? Should Melinda Corp buy the equipment based on NPV? Justify your decision.

(d) What is the payback period?

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