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)
Cornerstones of Cost Management (Cornerstones Series)
4th Edition
ISBN:9781305970663
Author:Don R. Hansen, Maryanne M. Mowen
Publisher:Don R. Hansen, Maryanne M. Mowen
Chapter19: Capital Investment
Section: Chapter Questions
Problem 22E
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![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)](/v2/_next/image?url=https%3A%2F%2Fcontent.bartleby.com%2Fqna-images%2Fquestion%2Fe72db9c3-1f9d-442a-ba62-bcb6d45fbdb1%2Ffcbb6567-7798-4f0c-b37d-101ab6e25da4%2F8plgip_processed.jpeg&w=3840&q=75)
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)
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