Question
A manufacturer is considering an investment in new equipment. The new equipment requires an initial investment of $169,000. It will generate the following present values
A manufacturer is considering an investment in new equipment. The new equipment requires an initial investment of $169,000. It will generate the following present values of net cash flows. Determine the break-even time for this equipment.
| Year | Present Value of Net Cash Flows | Cumulative Present Value of Net Cash Flows |
|---|---|---|
| Initial investment | $(169,000) | $(169,000) |
| Year 1 | 53,000 | (116,000) |
| Year 2 | 46,202 | (69,798) |
| Year 3 | 45,085 | (24,713) |
| Year 4 | 38,315 | 13,602 |
Note: Round "Break-even time" to 1 decimal
|
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Audit Risk Alert Employee Benefit Plans Industry Developments 2019
Authors: AICPA
1st Edition
1948306867, 978-1948306867
