Problem:
Isomer Industrial Training Corporation is considering the purchase of new presentation equipment at a cost of $150,000. The equipment has an estimated useful life of 10 years with an expected salvage value of zero. The equipment is expected to generate net cash inflows of $35,000 per year in each of the 10 years. Isomer's discount rate is 16%. Isomer uses the straight-line method of depreciation for its assets.
Required:
Question: What is the net present value of the presentation equipment?
A. $950
B. $19,155
C. $(36,500)
D. $(53,340)
Note: Show supporting computations in good form.