Omega Company, a public company, must perform an impairment test on some specialized equipment that it owns. The equipment will produce the following cash flows at the end of each year: Year 1, $55,000; Year 2, $40,000; Year 3, $40,000 and Year 4, $40,000. The discount rate is 6%. The value in use, which is also equal to the fair value as equipment will not be sold, is equal to the present value of the estimated cash flows from the equipment.

Required:

1.What is the value in use (i.e. present value of estimated cash flows) of the equipment to the nearest dollar for this equipment? Show calculations. You may use your calculator, present value tables (3 marks)

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