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Homework answers / question archive / Fort Belvoir, VA is considering the purchase of a new $300k machine to assist with sorting recyclables at its post transfer station
Machine Cost | $300000 | |
working capital | $5000 | |
savings | $15000 | |
usefull life | 10 year | |
salvage value |
$150000 |
A)Machine Cost | $300000 | |
B)life of machine | 10 year | |
C)working capital requirement | $5000 | |
D)CPVIF for 10 years @ 8% | 6.71 | |
E)present value of working capital (C*D) | $33550 | |
F)Present value of total cash out flow (A+E) | $333550 |
G)Yearly cash in flow | $15000 | |
H)CPVIF for 10 years @ 8% | 6.71 | |
I)Present value of cash in flow | $100650 | |
J) salvage vaue | $150000 | |
K) PVIF For 10 years @ 8% | 0.463 | |
L)Present value of salvage value | $69450 | |
M) Present value of total cash in flow | $170100 | |
Net loss (F - M) | $163450 |
CPVIF = Cumulative present value intex factor
PVIF = Present value intex factor