Exercise 24-23 (Algo) Break-even time LO A1 A shoe manufacturer is evaluating new equipment that would custom fit athletic shoes. The new equipment costs $116,000 and will generate $44,000 in net cash flows for five years. (Negative cumulative cash flows should be indicated with a minus sign.) Determine the break-even time for this equipment. Year Initial investment Year 1 Year 2 Year 3 Year 4 Year 5 Present Net Cash Flow x Value of 1 at 10% $ (116,000) x 44,000 x 44,000 x 44,000 x 44,000 x 44,000 x 1.0000 = 0.9091 = 0.8264 = 0.7513 = 0.6830 = 0.6209 = Present Value of Net Cash Flows (Round break-even time answers to two decimal places.) $ (116,000) Cumulative Present Value of Net Cash Flows $ (116,000)
Exercise 24-23 (Algo) Break-even time LO A1 A shoe manufacturer is evaluating new equipment that would custom fit athletic shoes. The new equipment costs $116,000 and will generate $44,000 in net cash flows for five years. (Negative cumulative cash flows should be indicated with a minus sign.) Determine the break-even time for this equipment. Year Initial investment Year 1 Year 2 Year 3 Year 4 Year 5 Present Net Cash Flow x Value of 1 at 10% $ (116,000) x 44,000 x 44,000 x 44,000 x 44,000 x 44,000 x 1.0000 = 0.9091 = 0.8264 = 0.7513 = 0.6830 = 0.6209 = Present Value of Net Cash Flows (Round break-even time answers to two decimal places.) $ (116,000) Cumulative Present Value of Net Cash Flows $ (116,000)
Chapter9: Capital Budgeting Techniques
Section: Chapter Questions
Problem 12PROB
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