The initial cash outlay and cash flow projections are, Ask an Expert

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The initial cash outlay and cash flow projections are presented below for new equipment that Outdoor Sports, Inc. is evaluating. Outdoor Sports is considering manufacturing a new line of laser rangefinders:

Initial Cash Outlay	$1,500,000
Annual Net cash inflowsYears 1 -5	$450,000

Outdoor Sports uses a cost of capital of 12 percent for discounting purposes.

Required:

What is the net present value of the initial outlay?

Using the net present value method, evaluate the decision to purchase the new equipment.

Using the Internal Rate of Return method, evaluate the decision to purchase the new equipment.

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Accounting Basics, Accounting

Category:- Accounting Basics
Reference No.:- M9957223

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