Chapter 10 Case 1 Arnold Company is considering purchasing new equipment to replace their old equipment. The pertinent information for the old equipment and the new equipment is as follows: New Equipment 102,000 Original Cost Old Equipment 62,000 Annual Variable Costs Materials 50,000 Labor 42,000 Annual Fixed Costs 18,000 Remaining Life 4 years Salvage Value at end of life 2,000 Salvage Value if sold now 28,000 10% 44,000 32,000 14,000 4 years 18,000 Required Return 10% Create a computer spreadsheet to calculate the Net Present Value of the New Machine. Ignore tax consequences. Net Initial Cost Annual Savings Differential Salvage Value at end of life Net Present Value Dollar Amount (74,000) Present Value Factor Present Value (74,000) 326 ZOOM