Consider a piece of equipment for which the expenditure at the beginning of period 1 is $40,000. Given that this is a cost, consider it as a negative in a net revenue framework.
The net revenue at the end of year 1 is $10,000.
The net revenue at the end of year 2 is $15,000.
The net revenue at the end of year 3 is $20,000. This includes revenue from operations and sale of the used equipment.
The interest rate is 3%.
What is the net present value of this net revenue stream?