Answered step by step
Verified Expert Solution
Link Copied!

Question

1 Approved Answer

Lakeside Inc. is considering replacing old production equipment with state-of-the-art technology that will allow production cost savings of $10,000 per month. The new equipment will

image text in transcribed
image text in transcribed
image text in transcribed
image text in transcribed
image text in transcribed
Lakeside Inc. is considering replacing old production equipment with state-of-the-art technology that will allow production cost savings of $10,000 per month. The new equipment will have a five-year life and cost $450,000, with an estimated salvage value of $30,000, Lakeside's cost of capital is 8%. Table 6-4 and Table 6-5. (Use appropriate factor(s) from the tables provided. Round the PV factors to 4 decimals.) Required: Calculate the net present value of the new production equipment. (Round your final answer to nearest whole dollars.) Nel present value Lakeside Inc. is considering replacing old production equipment with state-of-the-art technology that will allow production cost savings of $10,000 per month. The new equipment will have a five-year life and cost $405,000, with an estimated salvage value of $30,000 Lakeside's cost of capital is 12%. Table 6-4 and Table 6-5. (Use appropriate factor(s) from the tables provided. Round the PV factors to 4 decimals.) Required: Calculate the present value ratio of the new production equipment. (Round your answer to 2 decimal places.) Present value ratio raded Homework Saved Help Lakeside Inc. is considering replacing old production equipment with state-of-the-art technology that will allow production cost savings of $10,000 per month. The new equipment will have a five-year life and cost $390,000, with an estimated salvage value of $30,000. Lakeside's cost of capital is 10%. Lakeside Inc. uses a straight-line depreciation method. Required: Calculate the payback period and the accounting rate of return for the new production equipment. (Round your answers to 2 decimal places.) Payback period Accounting rate of return years % TABLE 6.5 FACTORS FOR CALCULATING THE PRESENT VALUE OF AN ANNUITY OF $I No. of Periods Discount Rate 10% 12% 2% 6% 8% 14% 16% 18% 20% 0.8333 1 2 3 0.980 1.942 2.884 0.9615 1.8861 2.7751 0.9434 1.8334 2.6730 3.4651 4.2124 0.9259 1.7833 2.5771 3.3121 3.9927 0.9091 1.7355 2.4869 3.1699 3.7908 0.8929 1.6901 2.4018 3.0373 3.6048 0.8772 1.6467 2.3216 2.9137 3.4331 0.8621 1.6052 2.2459 2.7982 3.2743 0.8475 1.5656 2.1743 2.6901 3.1272 1.5278 2.1065 2.5887 2.9906 4 5 3.808 4.713 3.6299 4.4518 6 7 8 5.601 6.472 7.325 8.162 8.983 5.2421 6.0021 6.7327 7.4353 8.1109 4.9173 5.5824 6.2098 6.8017 7.3601 4.6229 5.2064 5.7466 6.2469 6.7101 4.3553 4.8684 5.3349 5.7590 6.1446 4.1114 4.5638 4.9676 5.3282 5.6502 3.8887 4.2883 4.6389 4.9464 5.2161 3.6847 4.0386 4.3436 4.6065 4.8332 3.4976 3.8115 4.0776 4.3030 4.4941 3.3255 3.6046 3.8372 4.0310 4.1925 9 10 11 12 13 14 9.787 10.575 11.348 12.106 12.849 8.7605 7.8869 9.3851 8.3838 9.9856 8.8527 10.5631 9.2950 11.1184 9.7122 7.1390 7.5361 7.9038 8.2442 8.5595 6.4951 6.8137 7.1034 7.3667 7.6061 5.9377 6.1944 6.4235 6.6282 6.8109 5.4527 5.6603 5.8424 6.0021 6.1422 5.0286 5.1971 5.3423 5.4675 5.5755 4.6560 4.7932 4.9095 5.0081 5.0916 4.3271 4.4392 4.5327 4.6106 4.6755 15 16 17 18 13.578 14.292 14.992 15.678 16.351 11.6523 10.1059 12.1657 10.4773 12.6593 10.8276 13.1339 11.1581 13.5903 11,4699 8.8514 9.1216 9.3719 9.6036 9.8181 7.8237 8.0216 8.2014 8.3649 8.5136 6.9740 7.1196 7.2497 7.3658 7.4694 6.2651 6.3729 6.4674 6.5504 6.6231 5.6685 5.7487 5.8178 5.8775 5.9288 5.1624 5.2223 5.2732 5.3162 5.3527 4.7296 4.7746 4.8122 4.8435 4.8696 19 20 21 22 10.0168 10.2007 4.8913 4.9094 23 24 25 17.011 17.658 18.292 18.914 19.523 14.0292 11.7641 14.4511 12.0416 14.8568 12.3034 15.2470 12.5504 15.6221 12.7834 10.3711 10.5288 10.6748 8.6487 8.7715 8.8832 8.9847 9.0770 7.5620 7.6446 7.7184 7.7843 7.8431 6.6870 6.7429 6.7921 6.8351 6.8729 5.9731 6.0113 6.0442 6.0726 6.0971 5.3837 5.4099 5.4321 5.4509 5.4669 4.9245 4.9371 4.9476 30 35 40 45 50 22.396 24.999 27.355 29.490 31.424 17.2920 13.7648 18.6646 14.4982 19.7928 15.0463 20.7200 15.4558 21.4822 15.7619 11.2578 11.6546 11.9246 12.1084 12.2335 9.4269 9.6442 9.7791 9.8628 9.9148 8.0552 8.1755 8.2438 8.2825 8.3045 7.0027 7.0700 7.1050 7.1232 7.1327 6.1772 6.2153 6.2335 6.2421 6.2463 5.5168 5.5386 5.5482 5.5523 5.5541 4.9789 4.9915 4.9966 4.9986 4.9995

Step by Step Solution

There are 3 Steps involved in it

Step: 1

blur-text-image

Get Instant Access to Expert-Tailored Solutions

See step-by-step solutions with expert insights and AI powered tools for academic success

Step: 2

blur-text-image_2

Step: 3

blur-text-image_3

Ace Your Homework with AI

Get the answers you need in no time with our AI-driven, step-by-step assistance

Get Started

Recommended Textbook for

Accounting Information Systems Understanding Business Processes

Authors: Brett Considine, Alison Parkes, Karin Olesen, Michael Lee, Derek Speer

3rd Edition

1742165559, 978-1742165554

More Books

Students also viewed these Accounting questions

Question

4 What is specific in constructivist approach to group coaching?

Answered: 1 week ago

Question

Explain the legal environments impact on labor relations. page 631

Answered: 1 week ago