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A shoe manufacturer is evaluating new equipment that would custom fit athletic shoes. The new equipment costs $101.000 and will generate $40.000 in net cash
A shoe manufacturer is evaluating new equipment that would custom fit athletic shoes. The new equipment costs $101.000 and will generate $40.000 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 Present Value Cumulative Present of Net Cash Value of Net Cash Flows Flows $ (101.000) (101,000) Initial investment Year 1 Year 2 Year 3 Year 4 Year 5 Present Net Cash Flow > Value of 1 at 12% $ (101.000) 1.0000 = 40.000 0.8929 = 40.000 0.7972 - 40.000 x 0.7118 = 40.000 x 0.6355 = 0.5674 = 40.000 (Round break-even time answers to two decimal places.)
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