Exercise 24-23 (Algo) Break-even time LO A1 A shoe manufacturer is evaluating new equipment that would custom fit athletic shoes. The new equipment costs $116,000 and will generate $44,000 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% $ (116,000) x 44,000 x 44,000 x 44,000 x 44,000 x 44,000 x 1.0000 = 0.9091 = 0.8264 = 0.7513 = 0.6830 = 0.6209 = Present Value of Net Cash Flows (Round break-even time answers to two decimal places.) $ (116,000) Cumulative Present Value of Net Cash Flows $ (116,000)
Exercise 24-23 (Algo) Break-even time LO A1 A shoe manufacturer is evaluating new equipment that would custom fit athletic shoes. The new equipment costs $116,000 and will generate $44,000 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% $ (116,000) x 44,000 x 44,000 x 44,000 x 44,000 x 44,000 x 1.0000 = 0.9091 = 0.8264 = 0.7513 = 0.6830 = 0.6209 = Present Value of Net Cash Flows (Round break-even time answers to two decimal places.) $ (116,000) Cumulative Present Value of Net Cash Flows $ (116,000)
Chapter1: Financial Statements And Business Decisions
Section: Chapter Questions
Problem 1Q
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Transcribed Image Text:Exercise 24-23 (Algo) Break-even time LO A1
A shoe manufacturer is evaluating new equipment that would custom fit athletic shoes. The new equipment costs $116,000
and will generate $44,000 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%
$
(116,000) x
44,000 x
44,000 x
44,000 x
44,000 x
44,000 x
1.0000 =
0.9091 =
0.8264 =
0.7513 =
0.6830 =
0.6209 =
Present Value
of Net Cash
Flows
(Round break-even time answers to two decimal places.)
$
(116,000)
Cumulative Present
Value of Net Cash
Flows
$
(116,000)
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