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Lukow Products is Investigating the purchase of automated equipment that will save $130,000 each year In direct labor and Inventory carrylng costs. This equipment costs
Lukow Products is Investigating the purchase of automated equipment that will save $130,000 each year In direct labor and Inventory carrylng costs. This equipment costs $840,000 and is expected to have a 5-year useful life with no salvage value. The company's required rate of return is 9% on all equipment purchases. Management expects this equipment to provide Intangible benefits such as greater flexibility and higher-quality output that will Increase future cash Inflows. Click here to view Exhiblt 14B-1 and Exhiblt 14B-2, to determine the approprlate discount factor(s) using table. Requlred: 1. What is the net present value of the plece of equipment before considering Its Intanglble benefits? Note: Enter negatlve 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 Intanglble benefits to Justlfy the $840,000 Investment? Note: Do not round Intermedlate calculatlons. Round your answer to the nearest whole dollar amount
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