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 posted to answer this question. 

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 6 0.8375 0.7462 7 0.8131 0.7107 8 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 0.6050 0.4363 0.5874 0.4155 0.5703 0.3957 0.5537 0.3769 0.5375 0.3589 0.4920 0.3101 25 0.4776 0.2953 8% 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 9% 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 0.5963 0.56450.5066 0.4556 0.5470 0.5132 0.4523 0.3996 0.5019 0.4665 0.40390.3506 0.4604 0.4240 0.3606 0.3075 0.4224 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 Rate of interest per period in percent Periods 3% 5% 8% 9% 10% 12% 14% 15% 16% 0.9709 0.9524 0.9259 0.9174 0.9091 0.8929 0.8772 0.8696 0.8621 1.9135 1.8594 1.7833 1.7591 1.73551.6901 1.6467 1.6257 1.6052 2.8286 2.7233 2.5771 2.5313 2.4869 2.4018 2.3216 2.2832 2.2459 3.7171 3.54603.3121 3.2397 3.16993.0374 2.9137 2.8550 2.7982 4.5797 4.3295 3.9927 3.8897 3.7908 3.6048 3.4331 3.3522 3.2743 5.41725.0757 4.62294.48594.3553 4.1114 3.8887 3.7845 3.6847 6.2303 5.7864 5.2064 5.0330 4.8684 4.5638 4.2883 4.1604 4.0386 7.0197 6.4632 5.7466 5.5348 5.33494.9676 4.6389 4.4873 4.3436 7.7861 7.1078 6.2469 5.9953 5.7590 5.3283 4.9464 4.7716 4.6065 10 8.5302 7.7217 6.7100 6.4177 6.1446 5.6502 5.21615.0188 4.8332 12 9.9540 8.8633 7.5361 7.1607 6.8137 6.1944 5.6603 5.4206 5.1971 15 | 11.9379 10.3797 8.5595 8.0607 7.6061 6.8109 6.1422 5.8474 5.5755 16 12.5611 10.8378 8.8514 8.3126 7.8237 6.9740 6.2651 5.9542 5.6685 13.1661 11.2741 9.1216 8.5436 8.0215 7.1196 6.37296.04725.7487 13.7535 11.6896 9.3719 8.7556 8.2014 7.2497 6.4674 6.1280 5.8178 14.3238 12.0853 9.6036 8.9501 8.36497.3658 6.5504 6.1982 5.8775 20 14.8775 12.4622 9.81829.1286 8.5135 7.4694 6.6231 6.2593 5.9288 21 | 15.4150 12.8212 10.0168 9.2922 8.6487 7.5620 6.68706.3125 5.9731 25 17.4132 14.0939 10.6748 9.8226 9.0770 7.8431 6.8729 6.4641 6.0971 20% 0.8333 1.5278 2.1065 2.5887 2.9906 3.3255 3.6046 3.8372 4.0310 4.1925 4.4392 4.6755 4.7296 4.7746 4.8122 4.8435 4.8696 4.8913 4.9476