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XYZ Company is considering the purchase of a new piece of equipment and has gathered the following information about the purchase: Initial investment ........ Annual cost savings Salvage value in 6 years .. Repair in 4 years ....... Cost of capital Life of project .. $20,000 20% of original cost of the equipment $14,000 10% 6 years The net present value of this new equipment was -$37,779. Calculate the salvage value for this piece of equipment. You will need to use the time value of money table factors posted in carmen to answer this question. To access these factors, click modules and then scroll to week 8. Click on the link labeled present & future value table factors. No credit will be awarded for this question using a means other than these table factors to answer this question. Present Value of a Lump-Sum Periods 10% Rate of interest per period in percent 4% 5% 6% 0.855 0.823 0.792 0.683 0.822 0.784 0.747 0.621 0.790 0.746 0.705 0.564 0.676 0.614 0.558 0.386 0.624 0.557 0.495 0.319 0.555 0.481 0.417 0.239 0.456 0.377 0.312 0.149 3% 0.888 0.863 0.837 0.744 0.701 0.642 0.554 10 12% 0.636 0.567 0.507 0.322 0.257 0.183 0.104 20 Future Value of a Lump-Sum Periods 5% 3% 1.126 1.159 1.194 1.344 1.425 1.558 1.805 Rate of interest per period in percent 4% 6% 10% 1.170 1.216 1.262 1.464 1.217 1.276 1.338 1.611 1.265 1.340 1.419 1.772 1.480 1.629 1.791 2.594 1.601 1.796 2.012 3.138 1.801 2.079 2.397 4.177 2.191 2.653 3.207 6.727 12% 1.574 1.762 1.974 3.106 3.896 5.474 9.646 Present Value of an Annuity Periods 3% 3.717 4.580 5.417 8.530 9.950 11.938 14.877 Rate of interest per period in percent 4% 5% 6% 10% 3.630 3.546 3.465 3.170 4.452 4.329 4.212 3.791 5.242 5.076 4.917 4.355 8.111 7.722 7.360 6.150 9.400 8.863 8.380 6.814 11.118 10.380 9.712 7.600 13.590 12.450 11.470 8.514 12% 3.037 3.605 4.111 5.650 6.194 6.811 7.469 12 20 Future Value of an Annuity Periods 3% Rate of interest per period in percent 4% 5% 6% 10% 4.246 4.310 4.375 4.641 5.416 5.526 5.637 6.105 6.633 6.802 6.975 7.716 12.006 12.578 13.181 15.937 15.025 15.917 16.869 21.384 20.024 21.579 23.276 31.772 29.778 33.066 36.786 57.275 4.184 5.309 6.468 11.464 14.190 18.599 26.870 12% 4.779 6.353 8.115 17.549 24.133 37.280 72.052 10 12 20

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