Question
HI, I need help calculating the payback method, NPV and the IRR for each of the following 2 pieces of equipment and based on the
HI, I need help calculating the payback method, NPV and the IRR for each of the following 2 pieces of equipment and based on the findings, deciding whether or not the purchase of the new equipment is a worthwhile investment.
Existing Equipment
Original Cost
60,000
Present Book Value
30,000
Annual Cash Operating Costs
145,000
Current Market Value
15,000
Market Value in Ten Years
0
Remaining useful Life
10 years
Replacement Equipment
Cost
600,000
Annual Cash Operating Costs
50,000
Market Value in Ten Years
0
Useful Life
10 years
Other Information
Cost of Capital
10%
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Financial accounting
Authors: Jerry J. Weygandt, Donald E. Kieso, Paul D. Kimmel
IFRS Edition
9781119153726, 978-1118285909
