A shoe manufacturer is evaluating new equipment that would custom fit athletic shoes. The new equipment costs $100,000 and will generate $39,000 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% $ (100,000) x 39,000 x 39,000 X 39,000 x 39,000 x 39,000 x 1.0000 09091 08264 07513 0.6830 = 0.6209 C Present Value of Net Cash Flows S (100,000) $ (Round break-even time answers to two decimal places.) Cumulative Present Value of Net Cash Flows (100,000)
A shoe manufacturer is evaluating new equipment that would custom fit athletic shoes. The new equipment costs $100,000 and will generate $39,000 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% $ (100,000) x 39,000 x 39,000 X 39,000 x 39,000 x 39,000 x 1.0000 09091 08264 07513 0.6830 = 0.6209 C Present Value of Net Cash Flows S (100,000) $ (Round break-even time answers to two decimal places.) Cumulative Present Value of Net Cash Flows (100,000)
Chapter1: Financial Statements And Business Decisions
Section: Chapter Questions
Problem 1Q
Related questions
Question
DO NOT GIVE SOLUTION IN IMAGE
Transcribed Image Text:A shoe manufacturer is evaluating new equipment that would custom fit athletic shoes. The new
equipment costs $100,000 and will generate $39,000 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
Net Cash Flow x
$
(100,000) x
39,000 x
39,000 x
39,000 x
39,000 x
39,000 x
Present
Value of 1
at 10%
1:0000
09091
CHE
08264 =
07513
0.6830 =
06209 =
Present Value
of Net Cash
Flows
$ (100,000) $
Cumulative Present
Value of Net Cash
Flows
(Round break-even time answers to two decimal places.)
(100,000)
Expert Solution
This question has been solved!
Explore an expertly crafted, step-by-step solution for a thorough understanding of key concepts.
This is a popular solution!
Trending now
This is a popular solution!
Step by step
Solved in 3 steps with 1 images
Knowledge Booster
Learn more about
Need a deep-dive on the concept behind this application? Look no further. Learn more about this topic, accounting and related others by exploring similar questions and additional content below.Recommended textbooks for you
Accounting
Accounting
ISBN:
9781337272094
Author:
WARREN, Carl S., Reeve, James M., Duchac, Jonathan E.
Publisher:
Cengage Learning,
Accounting Information Systems
Accounting
ISBN:
9781337619202
Author:
Hall, James A.
Publisher:
Cengage Learning,
Accounting
Accounting
ISBN:
9781337272094
Author:
WARREN, Carl S., Reeve, James M., Duchac, Jonathan E.
Publisher:
Cengage Learning,
Accounting Information Systems
Accounting
ISBN:
9781337619202
Author:
Hall, James A.
Publisher:
Cengage Learning,
Horngren's Cost Accounting: A Managerial Emphasis…
Accounting
ISBN:
9780134475585
Author:
Srikant M. Datar, Madhav V. Rajan
Publisher:
PEARSON
Intermediate Accounting
Accounting
ISBN:
9781259722660
Author:
J. David Spiceland, Mark W. Nelson, Wayne M Thomas
Publisher:
McGraw-Hill Education
Financial and Managerial Accounting
Accounting
ISBN:
9781259726705
Author:
John J Wild, Ken W. Shaw, Barbara Chiappetta Fundamental Accounting Principles
Publisher:
McGraw-Hill Education