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Pronghorn Industries is considering the purchase of new equipment costing $1,236,000 to replace existing equipment that will be sold for $183,200. The new equipment is
Pronghorn Industries is considering the purchase of new equipment costing $1,236,000 to replace existing equipment that will be sold for $183,200. The new equipment is expected to have a $220,000 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 35,900 units annually at a sales price of $28 per unit. Those units will have a variable cost of $12 per unit. The company will also incur an additional $96,800 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). Pronghorn Industries is considering the purchase of new equipment costing $1,236,000 to replace existing equipment that will be sold for $183,200. The new equipment is expected to have a $220,000 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 35,900 units annually at a sales price of $28 per unit. Those units will have a variable cost of $12 per unit. The company will also incur an additional $96,800 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)
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