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considering purchasing the following spa equipment: Laser Hair Removal Machines Microdermabrasion Machines Facial Oxygen Units $67,500 $28,700 $211,700 Cost per Machine $23,500 Annual Cash Inflow $125,000 $40,900 Annual Cash Outflow $90,500 $195,800 $25,400 Required Rate of Return 10% 11% 5% Useful Life 2 years 3 years $820 4 years $840 Residual Value $0 Assume that each equipment's annual cash flow will occur for the period equal to its useful life. Do not enter dollar signs or commas in the input boxes. Use the present values tables in the textbook appendix. Use the negative sign for negative values. Round your answers to the nearest whole number. a) Determine the NPV of each piece of equipment. Laser Hair Removal Machine: $ Microdermabrasion Machine: $ Facial Oxygen Unit: $ b) For each piece of equipment, determine the maximum acceptable price using the NPV method. Laser Hair Removal Machine: $ Microdermabrasion Machine: $

considering purchasing the following spa equipment: Laser Hair Removal Machines Microdermabrasion Machines Facial Oxygen Units $67,500 $28,700 $211,700 Cost per Machine $23,500 Annual Cash Inflow $125,000 $40,900 Annual Cash Outflow $90,500 $195,800 $25,400 Required Rate of Return 10% 11% 5% Useful Life 2 years 3 years $820 4 years $840 Residual Value $0 Assume that each equipment's annual cash flow will occur for the period equal to its useful life. Do not enter dollar signs or commas in the input boxes. Use the present values tables in the textbook appendix. Use the negative sign for negative values. Round your answers to the nearest whole number. a) Determine the NPV of each piece of equipment. Laser Hair Removal Machine: $ Microdermabrasion Machine: $ Facial Oxygen Unit: $ b) For each piece of equipment, determine the maximum acceptable price using the NPV method. Laser Hair Removal Machine: $ Microdermabrasion Machine: $

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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Tippy Toe Spa Company offers various services, such as facials, laser hair removal and microdermabrasion. Currently, the company is considering purchasing the following spa equipment: Laser Hair Removal Machines Microdermabrasion Machines Facial Oxygen Units Cost per Machine $67,500 $28,700 $23,500 Annual Cash Inflow $125,000 $211,700 $40,900 Annual Cash Outflow $90,500 $195,800 $25,400 Required Rate of Return 10% 11% 5% Useful Life 3 years 4 years 2 years Residual Value $820 $840 $0 Assume that each equipment's annual cash flow will occur for the period equal to its useful life. Do not enter dollar signs or commas in the input boxes. Use the present values tables in the textbook appendix. Use the negative sign for negative values. Round your answers to the nearest whole number. a) Determine the NPV of each piece of equipment. Laser Hair Removal Machine: $ Microdermabrasion Machine: $ Facial Oxygen Unit: $ b) For each piece of equipment, determine the maximum acceptable price using the NPV method. Laser Hair Removal Machine: $ Microdermabrasion Machine: $
Transcribed Image Text:Tippy Toe Spa Company offers various services, such as facials, laser hair removal and microdermabrasion. Currently, the company is considering purchasing the following spa equipment: Laser Hair Removal Machines Microdermabrasion Machines Facial Oxygen Units Cost per Machine $67,500 $28,700 $23,500 Annual Cash Inflow $125,000 $211,700 $40,900 Annual Cash Outflow $90,500 $195,800 $25,400 Required Rate of Return 10% 11% 5% Useful Life 3 years 4 years 2 years Residual Value $820 $840 $0 Assume that each equipment's annual cash flow will occur for the period equal to its useful life. Do not enter dollar signs or commas in the input boxes. Use the present values tables in the textbook appendix. Use the negative sign for negative values. Round your answers to the nearest whole number. a) Determine the NPV of each piece of equipment. Laser Hair Removal Machine: $ Microdermabrasion Machine: $ Facial Oxygen Unit: $ b) For each piece of equipment, determine the maximum acceptable price using the NPV method. Laser Hair Removal Machine: $ Microdermabrasion Machine: $
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