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Please detail final answers Exercise 13-4 Uncertain Future Cash Flows [LO13-4] Lukow Products is investigating the purchase of a piece of automated equipment that will
Please detail final answers
Exercise 13-4 Uncertain Future Cash Flows [LO13-4] Lukow Products is investigating the purchase of a piece of automated equipment that will save $100,000 each year in direct labor and inventory carrying costs. This equipment costs $890,000 and is expected to have a 6-year useful life with no salvage value. The company's required rate of return is 9% 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 Exhibit 13B-1 and Exhibit 13B-2, to determine the appropriate discount factor(s) using table. Required: 1. What is the net present value of the piece of equipment before considering its intangible benefits? (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 $890,000 investment? 1. Net present value 2. Minimum dollar valueStep by Step Solution
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