Sunland Inc. wants to replace its current equipment with new high$-$tech equipment. The existing equipment was purchased $5$

years ago at a cost of $$122,000.$ At that time, the equipment had an expected life of $10$ years, with no expected salvage value. The

equipment is being depreciated on a straight$-$line basis. Currently, the market value of the old equipment is $$40,100.$

The new equipment can be bought for $$175,880,$ including installation. Over its $10-$year life, it will reduce operating expenses

from $$193,900$ to $$145,000$ for the first six years, and from $$204,800$ to $$191,300$ for the last four years. Net working capital

requirements will also increase by $$20,700$ at the time of replacement.

It is estimated that the company can sell the new equipment for $$24,900$ at the end of its life. Since the new equipment$$s cash

flows are relatively certain, the project$$s cost of capital is set at $9\%,$ compared with $15\%$ for an average$-$risk project. The firm$$s maximum acceptable payback period is $5$ years.

Click here to view the factor table.

$$ Your answer is correct.

Calculate the initial investment amount.

Initial investment $

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Attempts: $1$ of $4$ used

Your Answer Correct Answer

$$ Your answer is correct.

Calculate the project$$s cash payback period. $($Round answer to $2$ decimal places, e$.$g$.15\mathrm{.}25.)$

Cash payback period years

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Solution Assistance Used

Attempts: $3$ of $4$ used

Calculate the project$$s net present value. $($If the net present value is negative, use either a negative sign preceding the number e$.$g$.$

$-45$ or parentheses e$.$g$.(45).$ For calculation purposes, use $5$ decimal places as displayed in the factor table provided, e$.$g$.1\mathrm{.}25124$ and

final answer to $0$ decimal places, e$.$g$.5,275.)$

Net present value