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Flint Industries is considering the purchase of new equipment costing $1,237,000 to replace existing equipment that will be sold for $182,900. The new equipment is expected to have a $214,000 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 37,300 units annually at a sales price of $24 per unit. Those units will have a variable cost of $13 per unit. The company will also incur an additional $97,000 in annual fixed costs. Click here to view the factor table. Calculate the present value of each cash flow assuming an 7% discount rate. (For calculation purposes, use 4 decimal places as displayed in the factor table provided and round final answer to 0 decimal place, e.g. 58,971. Enter negative amounts using a negative sign preceding the number e.g. -58,971 or parentheses e.g. (58,971).)

Flint Industries is considering the purchase of new equipment costing $1,237,000 to replace existing equipment that will be sold for $182,900. The new equipment is expected to have a $214,000 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 37,300 units annually at a sales price of $24 per unit. Those units will have a variable cost of $13 per unit. The company will also incur an additional $97,000 in annual fixed costs. Click here to view the factor table. Calculate the present value of each cash flow assuming an 7% discount rate. (For calculation purposes, use 4 decimal places as displayed in the factor table provided and round final answer to 0 decimal place, e.g. 58,971. Enter negative amounts using a negative sign preceding the number e.g. -58,971 or parentheses e.g. (58,971).)

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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Flint Industries is considering the purchase of new equipment costing $1,237,000 to replace existing equipment that will be sold for $182,900. The new equipment is expected to have a $214,000 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 37,300 units annually at a sales price of $24 per unit. Those units will have a variable cost of $13 per unit. The company will also incur an additional $97,000 in annual fixed costs. Click here to view the factor table. Calculate the present value of each cash flow assuming an 7% discount rate. (For calculation purposes, use 4 decimal places as displayed in the factor table provided and round final answer to 0 decimal place, e.g. 58,971. Enter negative amounts using a negative sign preceding the number e.g. -58,971 or parentheses e.g. (58,971).) Cash Flow Purchase of new equipment Salvage of old equipment Sales revenue Variable costs Additional fixed costs Salvage of new equipment Present Value
Transcribed Image Text:Flint Industries is considering the purchase of new equipment costing $1,237,000 to replace existing equipment that will be sold for $182,900. The new equipment is expected to have a $214,000 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 37,300 units annually at a sales price of $24 per unit. Those units will have a variable cost of $13 per unit. The company will also incur an additional $97,000 in annual fixed costs. Click here to view the factor table. Calculate the present value of each cash flow assuming an 7% discount rate. (For calculation purposes, use 4 decimal places as displayed in the factor table provided and round final answer to 0 decimal place, e.g. 58,971. Enter negative amounts using a negative sign preceding the number e.g. -58,971 or parentheses e.g. (58,971).) Cash Flow Purchase of new equipment Salvage of old equipment Sales revenue Variable costs Additional fixed costs Salvage of new equipment Present Value
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