Cooper Construction is considering purchasing new, technologically advanced equipment. The equipment will cost $625,000 with a salvage value of $50,000 at the end of its useful life of 10 years. The equipment is expected to generate additional annual cash inflows with the following probabilities for the next ten years:

Question

tkhunny · Answer

Value = 625000 - ((625000-50000)/10)*t for 0 <= t <= 10

Okay, there's your purchase and depreciation function.  Now what?