Chapter 7: Net Present Value and Capital Budgeting

The autoclave has a salvage value of $1,200 at the end of its economic life. Remember that the cash flow occurs at the end of year 5, and therefore must be discounted back five years. PV(Salvage Value) = C5 / (1 + r)5 = $1,200 / (1.10)5 = $745. The NPV of the autoclave is … ................
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