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A company wishes to buy new equipment for $11,500. The equipment is expected to generate an additional $3,600 in cash inflows for six years. All cash flows occur at year-end. A bank will make a $17,000 loan to the company at a 13% interest rate so that the company can purchase the equipment. Use the able below to determine break-even time for this equipment Year 0 1 2 3 456 Present Value of 1 at 138 1.0000 0.8850 0.7831 0.6931 0.6133 0.5428 0.4803

A company wishes to buy new equipment for $11,500. The equipment is expected to generate an additional $3,600 in cash inflows for six years. All cash flows occur at year-end. A bank will make a $17,000 loan to the company at a 13% interest rate so that the company can purchase the equipment. Use the able below to determine break-even time for this equipment Year 0 1 2 3 456 Present Value of 1 at 138 1.0000 0.8850 0.7831 0.6931 0.6133 0.5428 0.4803

FINANCIAL ACCOUNTING
FINANCIAL ACCOUNTING
10th Edition
ISBN:9781259964947
Author:Libby
Publisher:Libby
Chapter1: Financial Statements And Business Decisions
Section: Chapter Questions
Problem 1Q
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A company wishes to buy new equipment for $11,500. The equipment is expected to generate an additional $3,600 in cash inflows for six years. All cash flows occur at year-end. A bank will make a $17,000 loan to the company at a 13% interest rate so that the company can purchase the equipment. Use the table below to determine break-even time for this equipment: Year 0 123456 Present Value of 1 at 13% 1.0000 0.8850 0.7831 0.6931 0.6133 0.5428 0.4803
Transcribed Image Text:A company wishes to buy new equipment for $11,500. The equipment is expected to generate an additional $3,600 in cash inflows for six years. All cash flows occur at year-end. A bank will make a $17,000 loan to the company at a 13% interest rate so that the company can purchase the equipment. Use the table below to determine break-even time for this equipment: Year 0 123456 Present Value of 1 at 13% 1.0000 0.8850 0.7831 0.6931 0.6133 0.5428 0.4803
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