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How do I find the PV factor? Heels, a shoe manufacturer, is evaluating the costs and benefits of new equipment that would custom fit each
How do I find the PV factor?
Heels, a shoe manufacturer, is evaluating the costs and benefits of new equipment that would custom fit each pair of athletic shoes. The customer would have his or her foot scanned by digital computer equipment; this information would be used to cut the raw materials to provide the customer a perfect fit. The new equipment costs $112,000 and is expected to generate an additional $44,000 in cash flows for 5 years. A bank will make a $112,000 loan to the company at a 15% interest rate for this equipment's purchase and compute the recovery time for both the payback period and break-even time. (PV of $1. FV of $1. PVA of $1. and FVA of $1 (Use appropriate fector(s) from the tables provlded.) Complete this question by entering your answers in the tabs below Break even time yback P Compute the recovery time for the break-even time. (Cumulative net cash outflows must be entered with a minus sign. Round your Break-even time answer to 1 decimal place.) Values are Based on: 15% Cumulative Present Value of Inflow (Outflow) Cash InfloWPV ar (Outflow) x | PV Factor | | Present Value 0 S (112.000) x 44,000x 44,000x 1.0000= 0.8696 | $ (112,000)| S (112.000) 38,262 (73,738)Step by Step Solution
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