70.2K

Verified Solution

Link Copied!

Your answer is partially correct. Ayayal Industries is considering the purchase of new equipment costing $1.200.000 to replace existing equipment that will be sold for $180,000. The new equipment is expected to have a $200,000 salvage value at the end of its 5-year life. During the period of its use. the equipment will allow the company to produce and sell an additional 30,000 units annually at a sales price of $20 per unit. Those units will have a variable cost of $12 per unit. The company will also incur an additional $90,000 in annual fixed costs. Click here to view the factor table. Calculate the present value of each cash flow assuming an 6% discount rate. (For calculation purposes, use 4 decimal places as displayed in the factor table provided and round final answer to decimal place, e.g. 58,971. Enter negative amounts using a negative sign preceding the number eg.-58,971 or parentheses es. (58,9711) Cash Flow Present Value $ Purchase of new equipment 180,000 Salvage of old equipment Sales revenue Question 3 of 8 0.8375 Calculate the present value of each cash flow assuming an 6% discount rate. (For calculation purposes, use 4 decimal places as displayed in the factor table provided and round final answer to decimal place, eg. 58,971. Enter negative amounts using a negative sign preceding the number e.g. -58,971 or parentheses eg. (58,971)) Cash Flow Present Value $ Purchase of new equipment 180,000 Salvage of old equipment Sales revenue Variable costs Additional fixed costs 1 Salvage of new equipment

Answer & Explanation Solved by verified expert

See Answer