Golden corp is considering the purchase of new equipment costing $80000.The expected life of the equipment is 10 years.It is expected that the new equipment
can generate an increase in net income for the next 10 years. The probabilities for the increase in net income depend on the state of the economy.
probabilities after tax net income expected value of EAT
recession .3 ($15000)
normal .5 $25000
boom .2 $35000
the equipment will be depreciated using straight line depreciation.Goldens cost of the capital is %14.What is the expected NPV?should they purchase the