XYZ Company is considering the purchase of a new piece of equipment and has gathered the following information about the purchase: ? Initial investment Annual cost savings Salvage value in 6 years $30,000 20% of original cost of the equipment $11,000 10% Repair in 4 years Cost of capital Life of project 6 years If the new piece of equipment is purchased then the equipment currently being used can be sold at the time of purchase of the new equipment for $9,000. The before-tax net present value of this new equipment was -$18,661. Calculate the salvage value for this piece of equipment. Ignore the effects of income taxes. Present Value of a Lump-Sum Periods 3% 1 0.9709 2 0.9426 3 0.9151 4 0.8885 5 0.8626 6 0.8375 7 0.8131 8 0.7894 9 0.7664 10 0.7441 12 0.7014 15 0.6419 16 0.6232 17 0.6050 18 0.5874 19 0.5703 20 0.5537 21 0.5375 24 0.4920 25 0.4776 5% 0.9524 0.9070 0.8638 0.8227 0.7835 0.7462 0.7107 0.6768 0.6446 0.6139 0.5568 0.4810 0.4581 0.4363 0.4155 0.3957 0.3769 0.3589 0.3101 0.2953 0.9259 0.8573 0.7938 0.7350 0.6806 0.6312 0.5835 0.5403 0.5003 0.4630 0.3971 0.3152 0.2919 0.2703 0.2503 0.2317 0.2146 0.1987 0.1577 0.1460 Rate of interest per period in percent 99% 10% 12% 14% 0.9174 0.9091 0.8929 0.8772 0.8417 0.8265 0.7972 0.7695 0.7722 0.7513 0.7118 0.6750 0.7084 0.6830 0.6355 0.5921 0.6499 0.6209 0.5674 0.5194 0.5962 0.5645 0.5066 0.4556 0.5460 0.5132 0.4523 0.3996 0.5019 0.4665 0.4039 0.3506 0.4604 0.4240 0.3606 0.3075 0.4225 0.3855 0.3220 0.2697 0.3555 0.3186 0.2567 0.2076 0.2745 0.2394 0.1827 0.1401 0.2519 0.2176 0.1631 0.1229 0.2311 0.1978 0.1456 0.1078 0.2120 0.1799 0.1300 0.0946 0.1945 0.1635 0.1161 0.0829 0.1784 0.1486 0.1037 0.0728 0.1637 0.1351 0.0926 0.0638 0.1264 0.1015 0.0659 0.0431 0.1160 0.0923 0.0588 0.0378 15% 0.8696 0.7561 0.6575 0.5718 0.4972 0.4323 0.3759 0.3269 0.2843 0.2472 0.1869 0.1229 0.1069 0.0929 0.0808 0.0703 0.0611 0.0531 0.0349 0.0304 16% 0.8621 0.7432 0.6407 0.5520 0.4761 0.4104 0.3538 0.3050 0.2630 0.2267 0.1685 0.1079 0.0930 0.0802 0.0691 0.0596 0.0514 0.0443 0.0284 0.0245 20% 0.8333 0.6944 0.5787 0.4823 0.4019 0.3349 0.2791 0.2326 0.1938 0.1615 0.1122 0.0649 0.0541 0.0471 0.0376 0.0313 0.0261 0.0217 0.0126 0.0105 Present Value of an Annuity Periods 3% 0.9709 2 1.9135 3 2.8286 4 3.7171 5 4.5797 6 5.4172 7 6.2303 8 7.0197 9 7.7861 10 8.5302 12 9.9540 15 11.9379 16 12.5611 17 13.1661 18 | 13.7535 19 14.3238 20 14.8775 21 15.4150 25 17.4132 5% 0.9524 1.8594 2.7233 3.5460 4.3295 5.0757 5.7864 6.4632 7.1078 7.7217 8.8633 10.3797 10.8378 11.2741 11.6896 12.0853 12.4622 12.8212 14.0939 8% 0.9259 1.7833 2.5771 3.3121 3.9927 4.6229 5.2064 5.7466 6.2469 6.7100 7.5361 8.5595 8.8514 9.1216 9.3719 9.6036 9.8182 10.0168 10.6748 Rate of interest per period in percent 9% 10% 12% 14% 0.9174 0.9091 0.8929 0.8772 1.7591 1.7355 1.6901 1.6467 2.5313 2.4869 2.4018 2.3216 3.2397 3.1699 3.0374 2.9137 3.8897 3.7908 3.6048 3.4331 4.4859 4.3553 4.1114 3.8887 5.0330 4.8684 4.5638 4.2883 5.5348 5.3349 4.9676 4.6389 5.9953 5.7590 5.3283 4.9464 6.4177 6.1446 5.6502 5.2161 7.1607 6.8137 6.1944 5.6603 8.0607 7.6061 6.8109 6.1422 8.3126 7.8237 6.9740 6.2651 8.5436 8.0215 7.1196 6.3729 8.7556 8.2014 7.2497 6.4674 8.9501 8.3649 7.3658 6.5504 9.1286 8.5135 7.4694 6.6231 9.2922 8.6487 7.5620 6.6870 9.8226 9.0770 7.8431 6.8729 15% 0.8696 1.6257 2.2832 2.8550 3.3522 3.7845 4.1604 4.4873 4.7716 5.0188 5.4206 5.8474 5.9542 6.0472 6.1280 6.1982 6.2593 6.3125 6.4641 16% 20% 0.8621 0.8333 1.6052 1.5278 2.2459 2.1065 2.7982 2.5887 3.2743 2.9906 3.6847 3.3255 4.0386 3.6046 4.3436 3.8372 4.6065 4.0310 4.8332 4.1925 5.1971 4.4392 5.5755 4.6755 5.6685 4.7296 5.7487 4.7746 5.8178 4.8122 5.8775 4.8435 5.9288 4.8696 5.9731 4.8913 6.0971 4.9476