TheJohnson Research Organization, a nonprofit organization t

TheJohnson Research Organization, a nonprofit organization that does notpay taxes, is considering buying laboratory equipment with an estimatedlife of 7 years so it will not have to use outsiders’ laboratories forcertain types of work. The following are all of the cash flows affectedby the decision:  Investment (outflow at time 0) $ 5,000,000  Periodic operating cash flows:  Annual cash savings because outside laboratories  are not used 1,550,000  Additional cash outflow for people and supplies to operate  the equipment 350,000  Salvage value after seven years, which is the estimated  life of this project 550,000  Discount rate 16 % Required: Calculate the net present value of this decision. Should the organization buy the equipment? (Round present value factors to three decimal places. Negative amount should be indicated by a minus sign.)

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