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help solving Lukow Products is investlgating the purchase of a piece of automated equipment that will save $140,000 each year in direct labor and inventory
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Lukow Products is investlgating the purchase of a piece of automated equipment that will save $140,000 each year in direct labor and inventory carrying costs. This equipment costs $730,000 and is expected to have a 6 -year useful life with no salvage value. The company's required rate of return is 16% on all equipment purchases. Management anticipates that this equipment will provide Intangible benefits such as greater flexibility and higher-quality output that will result in additional future cash inflows. Click here to view and to determine the appropriate discount factor(s) using table. Required: 1. What is the net present value of the plece of equipment before considering its intanglble benefits? (Enter negative amount with a minus sign. Round your final answer to the nearest whole dollar amount.) 2. What minimum dollar value per year must be provided by the equipment's intangible benefits to justify the $730,000 investment? (Do not round intermediate calculations. Round your answer to the nearest whole dollar amount.) Step by Step Solution
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