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Please help Bridgeport Industries is considering the purchase of new equipment costing $1,235,000 to replace existing equipment that will be sold for $180,700. The new
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Bridgeport Industries is considering the purchase of new equipment costing $1,235,000 to replace existing equipment that will be sold for $180,700. The new equipment is expected to have a $204,000 salvage value at the end of its 5-year life. During the period of its use, the equipment will allow the company to produce and sell an additional 30,900 units annually at a sales price of $27 per unit. Those units will have a variable cost of $13 per unit. The company will also incur an additional $94,700 in annual fixed costs. Click here to view the factor table. Calculate the present value of each cash flow assuming an 7% discount rate. (For calculation purposes, use 4 decimal places as displayed in the factor table provided and round final answer to 0 decimal place, e.g. 58,971. Enter negative amounts using a negative sign preceding the number e.g.-58,971 or parentheses e.g. (58,971).) Cash Flow Present Value (1235000) Purchase of new equipment 180700 Salvage of old equipment Sales revenue Variable costs Additional fixed costs 145452 Salvage of new equipmentStep by Step Solution
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