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A shoe manufacturer is evaluating new equipment that would custom fit athletic shoes. The new equipment costs $107,000 and will generate $43,000 in net
A shoe manufacturer is evaluating new equipment that would custom fit athletic shoes. The new equipment costs $107,000 and will generate $43,000 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 Year Net Cash Flow x Value of 1 at 15% Present Value of Net Cash Cumulative Present Flows Value of Net Cash Flows Initial investment $ (107,000) x 1.0000- $ (107,000) $ (107,000) Year 1 43,000 x 0.8696 37,393 Year 2 43,000 x 0.7561= 32,512 Year 3 43,000 x 0.6575- 28,273 Year 4 43,000 x 0.5718= 24,587 Year 5 43,000 x 0.4972= 21,380 (Round break-even time answers to two decimal places)
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