Cost of equipment needed Working capital needed Overhaul of equipment in four years Salvage value of the equipment in five years Annual revenues and costs: Sales revenues Cost of goods sold Out-of-pocket operating costs Discount rate Purchase of equipment Investment in working capital Sales Cost of goods sold Out-of-pocket operating costs Enter a formula into each of the cells marked with a ? below Exhibit 7-8 Overhaul of equipment Salvage value of the equipment Working capital released Total cash flows (a) $120,000 $80,000 $40,000 $20,000 Discount factor (14%) (b) Present value of cash flows (a) x (b) Net present value $255,000 $160,000 $50,000 11% Now ? ? ? ? ? ? 1 ? ? ? ? ? ? 2 ? ? ? ? ? ? Years 3 ? ? ? ? ? ? 4 ? ? ? ? ? ? ? 5
Cost of equipment needed Working capital needed Overhaul of equipment in four years Salvage value of the equipment in five years Annual revenues and costs: Sales revenues Cost of goods sold Out-of-pocket operating costs Discount rate Purchase of equipment Investment in working capital Sales Cost of goods sold Out-of-pocket operating costs Enter a formula into each of the cells marked with a ? below Exhibit 7-8 Overhaul of equipment Salvage value of the equipment Working capital released Total cash flows (a) $120,000 $80,000 $40,000 $20,000 Discount factor (14%) (b) Present value of cash flows (a) x (b) Net present value $255,000 $160,000 $50,000 11% Now ? ? ? ? ? ? 1 ? ? ? ? ? ? 2 ? ? ? ? ? ? Years 3 ? ? ? ? ? ? 4 ? ? ? ? ? ? ? 5
Corporate Financial Accounting
14th Edition
ISBN:9781305653535
Author:Carl Warren, James M. Reeve, Jonathan Duchac
Publisher:Carl Warren, James M. Reeve, Jonathan Duchac
Chapter9: Long-term Assets: Fixed And Intangible
Section: Chapter Questions
Problem 9.4BE: Revision of depreciation Equipment with a cost of 180,000 has an estimated residual value of 14,400,...
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