Question: Ocoee Golf Course is considering the purchase of new equipment that will cost $1,250,000 if purchased today and will generate the following cash disbursements and receipts. Should Ocoee pursue the investment if the cost of capital is 8 percent? Why?
|
Year
|
Cash
Receipts
|
Cash
Disbursements
|
Net Cash
Flow
|
|
1
|
950,000
|
500,000
|
450,000
|
|
2
|
925,000
|
475,000
|
450,000
|
|
3
|
800,000
|
450,000
|
350,000
|
|
4
|
675,000
|
430,000
|
245,000
|