Merrill Productions is considering the purchase of a new movie camera, which will be used for major motion pictures

Accounting Mar 13, 2021

Merrill Productions is considering the purchase of a new movie camera, which will be used for major motion pictures. The new camera will cost $30,000, have an eight-year life, and create cost savings of $5,000 per year. The new camera will require $700 of maintenance each year. Merrill Productions uses a discount rate of 9 percent.

Present value tables or a financial calculator are required.

Compute the net present value of the new camera.
Determine the payback period.

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