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A shoe manufacturer is evaluating new equipment that would custom fit athletic shoes. The new equipment costs $114,000 and will generate $45,000 in net cash
A shoe manufacturer is evaluating new equipment that would custom fit athletic shoes. The new equipment costs $114,000 and will generate $45,000 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 $ (114,000) $ (114,000) Initial investment Year 1 Present Net Cash Flow X Value of 1 at 10% $ (114,000) 1.0000 = 45,000 X 0.9091 45,000 x 0.8264 = 45,000 X 0.7513 45,000 x 0.6830 = 45,000 x 0.6209 = Year 2 Year 3 Year 4 Year 5 (Round break-even time answers to two decimal places.)
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