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 ............... $20,000 Salvage value in 6 years .......... 30% of original cost of the equipment Repair in 4 years ................. $21,000 Cost of capital ................... 10% Life of project ................... 6 years The net present value of this investment was calculated to be $22,924. Calculate the salvage value for this piece of equipment. Ignore income tax effects. You will need to use the present value table factors from above for the answer. 

Present Value of a Lump Sum Periods 3% 5% 0.9709 0.9524 0.9426 0.9070 0.9151 0.8638 0.8885 0.8227 0.8626 0.7835 0.8375 0.7462 0.8131 0.7107 0.7894 0.6768 9 0.7664 0.6446 10 0.7441 0.6139 12 0.7014 0.5568 15 0.64190.4810 16 0.6232 0.4581 17 0.6050 0.4363 | 0.5874 0.4155 19 0.5703 0.3957 20 0.5537 0.3769 21 0.5375 0.3589 24 0.4920 0.3101 25 0.4776 0.2953 Rate of interest per period in percent 8% 9% 10% 12% 14% 15% 0.9259 0.9174 0.9091 0.8929 0.87720.8696 0.8573 0.8417 0.8265 0.7972 0.7695 0.7561 0.7938 0.7722 0.7513 0.7118 0.6750 0.6575 0.73500.7084 0.6830 0.6355 0.59210.5718 0.68060.6499 0.6209 0.5674 0.51940.4972 0.63120.5963 0.5645 0.5066 0.45560.4323 0.5835 0.5470 0.5132 0.4523 0.3996 0.3759 0.5403 0.5019 0.4665 0.40390.3506 0.3269 0.5003 0.4604 0.4240 0.3606 0.3075 0.2843 0.4630 0.4224 0.3855 0.3220 0.2697 0.2472 0.3971 0.3555 0.3186 0.2567 0.2076 0.1869 0.3152 0.2745 0.2394 0.1827 0.1401 0.1229 0.2919 0.2519 0.2176 0.1631 0.1229 0.1069 0.2703 0.2311 0.1978 0.1456 0.1078 0.0929 0.2503 0.2120 0.1799 0.1300 0.0946 0.0808 0.2317 0.1945 0.1635 0.1161 0.0829 0.0703 0.2146 0.1784 0.1486 0.1037 0.0728 0.0611 0.1987 0.1637 0.1351 0.0926 0.0638 0.0531 0.1577 0.1264 0.1015 0.0659 0.0431 0.0349 0.1460 0.1160 0.0923 0.0588 0.0378 0.0304 16% 20% 0.86210.8333 0.7432 0.6944 0.6407 0.5787 0.5520 0.4823 0.4761 0.4019 0.4104 0.3349 0.3538 0.2791 0.3050 0.2326 0.2630 0.1938 0.2267 0.1615 0.1685 0.1122 0.1079 0.0649 0.0930 0.0541 0.0802 0.0471 0.0691 0.0376 0.0596 0.0313 0.0514 0.0261 0.0443 0.0217 0.0284 0.0126 0.0245 0.0105 Present Value of an Annuity Periods 1 2 3% 0.9709 1.9135 5% 0.9524 1.8594 8% 0.9259 1.7833 Rate of interest per period in percent 9% 10% 12% 14% 0.9174 0.9091 0.8929 0.8772 1.75911.7355 1.6901 1.6467 15% 0.8696 1.6257 16% 0.8621 1.6052 20% 0.8333 1.5278 - ZOOM + loan 18 19 20 21 24 25 0.5874 0.5703 0.5537 0.5375 0.4920 0.4776 0.4155 0.3957 0.3769 0.3589 0.3101 0.2953 0.2503 0.2317 0.2146 0.1987 0.1577 0.1460 0.2120 0.1945 0.1784 0.1637 0.1264 0.1160 0.1799 0.1635 0.1486 0.1351 0.1015 0.0923 0.1300 0.1161 0.1037 0.0926 0.0659 0.0588 0.0946 0.0829 0.0728 0.0638 0.0431 0.0378 0.0808 0.0703 0.0611 0.0531 0.0349 0.0304 0.0691 0.0596 0.0514 0.0443 0.0284 0.0245 0.0376 0.0313 0.0261 0.0217 0.0126 0.0105 Present Value of an Annuity Rate of interest per period in percent Periods 3% 5% 8% 9% 10% 12% 14% 15% 16% 20% 0.9709 0.9524 0.9259 0.9174 0.9091 0.8929 0.87720.8696 0.8621 0.8333 1.9135 1.8594 1.78331.75911.7355 1.6901 1.64671.6257 1.6052 1.5278 2.8286 2.7233 2.5771 2.5313 2.4869 2.4018 2.3216 2.2832 2.2459 2.1065 3.7171 3.54603.31213.2397 3.16993.0374 2.91372.8550 2.7982 2.5887 4.5797 4.3295 3.99273.8897 3.7908 3.6048 3.43313.3522 3.2743 2.9906 5.41725.0757 4.62294.48594.3553 4.1114 3.8887 3.7845 3.6847 3.3255 6.2303 5.7864 5.2064 5.0330 4.8684 4.5638 4.2883 4.1604 4.0386 3.6046 7.0197 6.4632 5.7466 5.5348 5.3349 4.9676 4.6389 4.4873 4.3436 3.8372 7.78617.1078 6.2469 5.9953 5.7590 5.3283 4.9464 4.7716 4.6065 4.0310 108.5302 7.7217 6.7100 6.4177 6.1446 5.6502 5.21615.0188 4.83324.1925 12 9.9540 8.86337.5361 7.1607 6.8137 6.1944 5.66035.4206 5.1971 4.4392 15 11.9379 10.3797 8.5595 8.0607 7.6061 6.8109 6.1422 5.8474 5.5755 4.6755 16 12.5611 10.8378 8.8514 8.3126 7.8237 6.9740 6.2651 5.9542 5.6685 4.7296 17 13.1661 11.2741 9.1216 8.5436 8.0215 7.1196 6.37296.04725.7487 4.7746 18 13.7535 11.6896 9.3719 8.7556 8.2014 7.2497 6.4674 6.1280 5.8178 4.8122 14.3238 12.0853 9.6036 8.9501 8.36497.3658 6.55046.1982 5.8775 4.8435 20 14.8775 12.4622 9.81829.1286 8.51357.4694 6.6231 6.2593 5.9288 4.8696 15.4150 12.8212 10.0168 9.2922 8.6487 7.5620 6.68706.3125 5.9731 4.8913 17.4132 14.0939 10.6748 9.8226 9.07707.8431 6.8729 6.4641 6.0971 4.9476