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XYZ Company is considering the purchase of a new piece of equipment and has gathered the following information about the purchase: Initial investment .............. ?
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 ............. $30,000 Salvage value in 6 years ........ 20% of original cost of the equipment Repair in 4 years ............... $11,000 Cost of capital ................. 10% 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 $8,000. The before-tax net present value of this new equipment was -$10,790. Calculate the salvage value for this piece of equipment. Ignore income tax effects. You will need to use the present value table factors posted in carmen to answer this question. To access these factors, click modules and then scroll to weeks 13 & 14. Click on the link labeled present value table factors. No credit will be awarded for this question using a means other than these table factors to answer this question.
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