The Manager of a Webster Manufacturing Company is considering the purchase of a new piece of manufacturing equipment, which will expand the company’s product line. The equipment has a cost of $150,000 and has no anticipated salvage value at the end of its useful life of four years. Based on anticipated sales, profits from the use of the equipment are estimated to be: , Year 1 – $40,000, Year 2 – 50,000, Year 3 – 60,000, Year 4 – 70,000,,The cost of capital to the company has been calculated at 8%. ,,Provide the Manager with (a) the Payback Period, and (b) the Net Present Value, associated with the potential purchasea. Explain the results of your financial analysis and the importance of this process. ,
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