Question
A shoe manufacturer is evaluating new equipment that would custom fit athletic shoes. The new equipment costs $90,000 and will generate $35,000 in net
A shoe manufacturer is evaluating new equipment that would custom fit athletic shoes. The new equipment costs $90,000 and will generate $35,000 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. Present Present Value Cumulative Present Year Net Cash Flow x Value of 1 = of Net Cash Value of Net Cash at 10% Flows Flows Initial investment $ (90,000) x 1.0000 $ (90,000) S (90,000) Year 1 35,000 x 0.9091 = Year 2 35,000 x 0.8264 Year 31 35,000 x 0.7513- Year 4 35,000 x 0.6830 Year 5 35,000 x 0.6209 (Round break-even time answers to two decimal places.).
Step by Step Solution
There are 3 Steps involved in it
Step: 1
Get Instant Access to Expert-Tailored Solutions
See step-by-step solutions with expert insights and AI powered tools for academic success
Step: 2
Step: 3
Ace Your Homework with AI
Get the answers you need in no time with our AI-driven, step-by-step assistance
Get Started