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Shamrock Company is conducting an impairment test and needs to develop a fair value estimate for machinery used as its manufacturing operation Given the nature of Shamrock's production process, the equipment is for special use
Shamrock Company is conducting an impairment test and needs to develop a fair value estimate for machinery used as its manufacturing operation Given the nature of Shamrock's production process, the equipment is for special use. (No secondhand market values are valable. The spent will be in 2 years, and Shamrock's accountants have developed the following cash flow information for the equipment mu Year 2021 Net Cash Flow Estimate $6,530 8,120 Probability Assessment 40% 60% 07 SI) 2022 5310 20% 60% 20% $(500) 1,910 3,280 Scrap value $460 890 2022 its by Study 50% 50% Click here to viewfactor tables Using expected cash flow and present value techniques, determine the fair value of the machinery at the end of 2020. Use a discount rate. Assumed cash flores our at the end of the year. (Round factor values to 5 decimal places, eg, 1.25124 and final answer to decimal places, eg. 458,581.) Fair value of the machinery at the end of 2020 LINK TO TEXT . LINK TO TEXT SAVE FOR LATE Question Attempts of Sused SUSHIT ANSWER
Expert Solution
| Year | Cash Flow | Probability | PV Factor | ||
| 2021 | 6,530 | 40% | 2,612 | 0.96154 | 2,512 |
| 8,120 | 60% | 4,872 | 0.96154 | 4,685 | |
| 2022 | - 500 | 20% | - 100 | 0.92456 | - 92 |
| 1,910 | 60% | 1,146 | 0.92456 | 1,060 | |
| 3,780 | 20% | 756 | 0.92456 | 699 | |
| Scrap Value | |||||
| 460 | 50% | 230 | 0.92456 | 213 | |
| 890 | 50% | 445 | 0.92456 | 411 | |
| Fair Value of the machinery at the end of 2020 | 9,486 | ||||
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