Exercise Algo Uncertain Future Cash Flows LO
Lukow Products is investigating the purchase of a piece of automated equipment that will save $ each year in direct labor and
inventory carrying costs. This equipment costs $ and is expected to have a year useful life with no salvage value. The
company's required rate of return is on all equipment purchases. Management anticipates that this equipment will provide
intangible benefits such as greater flexibility and higherquality output that will result in additional future cash inflows.
Click here to view Exhibit B and Exhibit B to determine the appropriate discount factors using table.
Required:
What is the net present value of the piece of equipment before considering its intangible benefits? Enter negative amount with a
minus sign. Round your final answer to the nearest whole dollar amount.
What minimum dollar value per year must be provided by the equipment's intangible benefits to justify the $ investment?
Do not round intermediate calculations. Round your answer to the nearest whole dollar amount.
Net present value
Minimum dollar value
