Homework Help is Here – Start Your Trial Now!
Business
Accounting
Calculate the present value of each cash flow assuming an 5% discount rate. (For the factor toble provided and round final answer to decimal

Calculate the present value of each cash flow assuming an 5% discount rate. (For the factor toble provided and round final answer to decimal

FINANCIAL ACCOUNTING
FINANCIAL ACCOUNTING
10th Edition
ISBN:9781259964947
Author:Libby
Publisher:Libby
Chapter1: Financial Statements And Business Decisions
Section: Chapter Questions
Problem 1Q
See similar textbooks
icon
Related questions
Question

Hh3.

 

Swifty Industries is considering the purchase of new equipment costing $1.220,000 to replace existing equipment that will be sold for $183.600. The new equipment is expected to have a $220.000 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 39,500 units annually at a sales price of $23 per unit. Those units will have a variable cost of $12 per unit. The company will also incur an additional $91,100 in annual fixed costs. Click here to view the factor table Calculate the present value of each cash flow assuming an 5% discount rate. (For calculation purposes, use 4 decimal places as displayed in the factor table previded and round final answer to 0 decimal place, eg 58.971. Enter negative amounts using a negative sign preceding the number eg.-58.971 or parentheses eg. (58,971)) Cash Flow Purchase of new equipment Salvage of old equipment Sales revenue Variable costs Additional fixed costs Present Value (1220000 183600 908500 474000 91100
Transcribed Image Text:Swifty Industries is considering the purchase of new equipment costing $1.220,000 to replace existing equipment that will be sold for $183.600. The new equipment is expected to have a $220.000 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 39,500 units annually at a sales price of $23 per unit. Those units will have a variable cost of $12 per unit. The company will also incur an additional $91,100 in annual fixed costs. Click here to view the factor table Calculate the present value of each cash flow assuming an 5% discount rate. (For calculation purposes, use 4 decimal places as displayed in the factor table previded and round final answer to 0 decimal place, eg 58.971. Enter negative amounts using a negative sign preceding the number eg.-58.971 or parentheses eg. (58,971)) Cash Flow Purchase of new equipment Salvage of old equipment Sales revenue Variable costs Additional fixed costs Present Value (1220000 183600 908500 474000 91100
Cash Flow Purchase of new equipment Salvage of old equipment Sales revenue Variable costs Additional fixed costs. Salvage of new equipment Present Value (1220000 183600 908500 474000 91100 220000
Transcribed Image Text:Cash Flow Purchase of new equipment Salvage of old equipment Sales revenue Variable costs Additional fixed costs. Salvage of new equipment Present Value (1220000 183600 908500 474000 91100 220000
Expert Solution
steps

Step by step

Solved in 3 steps

SEE SOLUTIONCheck out a sample Q&A here
Blurred answer
Knowledge Booster
Trade Credit
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
FINANCIAL ACCOUNTING
FINANCIAL ACCOUNTING
Accounting
ISBN:
9781259964947
Author:
Libby
Publisher:
MCG
Accounting
Accounting
Accounting
ISBN:
9781337272094
Author:
WARREN, Carl S., Reeve, James M., Duchac, Jonathan E.
Publisher:
Cengage Learning,
Accounting Information Systems
Accounting Information Systems
Accounting
ISBN:
9781337619202
Author:
Hall, James A.
Publisher:
Cengage Learning,
Horngren's Cost Accounting: A Managerial Emphasis…
Horngren's Cost Accounting: A Managerial Emphasis…
Accounting
ISBN:
9780134475585
Author:
Srikant M. Datar, Madhav V. Rajan
Publisher:
PEARSON
Intermediate Accounting
Intermediate Accounting
Accounting
ISBN:
9781259722660
Author:
J. David Spiceland, Mark W. Nelson, Wayne M Thomas
Publisher:
McGraw-Hill Education
Financial and Managerial Accounting
Financial and Managerial Accounting
Accounting
ISBN:
9781259726705
Author:
John J Wild, Ken W. Shaw, Barbara Chiappetta Fundamental Accounting Principles
Publisher:
McGraw-Hill Education
SEE MORE TEXTBOOKS