(Answered) Sampson corp buys equipment for 95000 that will last for 7

Accounting

Sampson Corp buys equipment for $95,000 that will last for 7 years. The equipment will generate cash flows of $22,000 per year and will have no salvage value at the end of its life. Ignore taxes. Use 16% required rate of return.

Required

(a) What is the present value (PV) of this investment at 16%?

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

(d) What is the payback period?

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