Question
T & T company has to purchase some new equipment. Two manufacturers have provided the following information: Equipment X Equipment Y Initial costs $135,000 $180,000
T & T company has to purchase some new equipment. Two manufacturers have provided the following information:
|
| Equipment X | Equipment Y |
| Initial costs | $135,000 | $180,000 |
| Estimated life | 5 years | 5 years |
| Annual savings | $45,000 | $48,000 |
Because the company requires a present value analysis, the following present value factors are furnished:
| Period | Present Value of $1.00 | Present Value of an Annuity of $1.00 |
| 1 | 0.90 | 0.90 |
| 2 | 0.85 | 1.75 |
| 3 | 0.75 | 2.50 |
| 4 | 0.65 | 3.15 |
| 5 | 0.60 | 3.75 |
Required:
| a. | Determine the present value of annual savings for each piece of equipment. Show your calculations clearly. |
| b. | What is the payback for each piece of equipment? Show your calculations clearly. |
| c. | Which investment is preferable? Why? |
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Fraud In Accounts Payable How To Prevent It
Authors: Mary S. Schaeffer
1st Edition
0470260459, 978-0470260456
