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Lukow Products is investigating the purchase of a plece of automated equipment that will save $110.000 each year in direct labor and inventory carrying costs.
Lukow Products is investigating the purchase of a plece of automated equipment that will save $110.000 each year in direct labor and inventory carrying costs. This equipment costs $760,000 and is expected to have a 8 -year useful life with no salvage value. The company's required rate of refurn is 10% 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 Exhibir 781 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 intangible benefits? Note: 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 $760,000, investment? Note: Do not round intermediate calculations. Round your answer to the nearest whole dollor amount. XHIBIT 7B-1 resent Value of $1;(1+r)n1 r1[1(1+r)n1]
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