Calculation of net present value | |||||
cash out flow | |||||
amount | factor | present value | |||
cost of equpment-new | 2450000 | 1 | 2450000 | ||
sale value of equipment-old | -242828 | 1 | -242828 | ||
training cost | 85000 | 1 | 85000 | ||
maintenance cost-new | 95600 | 0.64993 | 62133.31 | ||
total cash present value of outflow | 2354305 | ||||
calculation of present value of cash inflow | |||||
operating cost decrease | amount | pv factor @9% | present value | ||
1 | 389400 | 0.91743 | 357247.2 | ||
2 | 399000 | 0.84168 | 335830.3 | ||
3 | 410800 | 0.77218 | 317211.5 | ||
4 | 425200 | 0.70843 | 301224.4 | ||
5 | 433400 | 0.64993 | 281679.7 | ||
6 | 434500 | 0.59627 | 259079.3 | ||
7 | 437600 | 0.54703 | 239380.3 | ||
salvage value | 379600 | 0.54703 | 207652.6 | ||
present value of cash inflow | 2299305 | ||||
Net present value = present value of cash inflow-outflow | |||||
Net present value = 2299305-2354305 | |||||
net present value = -55000 | |||||
Should not purchase the new machine to replace existing |
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Riverbed Inc. manufactures snowsuits. Riverbed is considering purchasing a new sewing machine at a cost of...
Your answer is partially correct. Try again. Hillsong Inc, manufactures snowsuits. Hillsong is considering purchasing a new sewing machine at a cost of $2.45 million. Its existing machine was purchased five years ago at a price of $1.8 million; six months ago, Hillsong spent $55,000 to keep it operational. The existing sewing machine can be sold today for $242,828. The new sewing machine would require a one-time, $85,000 training cost. Operating costs would decrease by the following amounts for years...
Hillsong Inc. manufactures snowsuits. Hillsong is considering purchasing a new sewing machine at a cost of $2.45 million. Its existing machine was purchased five years ago at a price of $1.8 million; six months ago, Hillsong spent $55,000 to keep it operational. The existing sewing machine can be sold today for $240,164. The new sewing machine would require a one-time, $85,000 training cost. Operating costs would decrease by the following amounts for years 1 to 7: Year 1 $390,800 2...
Hillsong Inc. manufactures snowsuits. Hillsong is considering purchasing a new sewing machine at a cost of $2.45 million. Its existing machine was purchased five years ago at a price of $1.8 million; six months ago, Hillsong spent $55,000 to keep it operational. The existing sewing machine can be sold today for $246,028. The new sewing machine would require a one-time, $85,000 training cost. Operating costs would decrease by the following amounts for years 1 to 7: Year 1 $389,000 2...
Hillsong Inc. manufactures snowsuits. Hillsong is considering purchasing a new sewing machine at a cost of $2.45 million. Its existing machine was purchased five years ago at a price of $1.8 million six months ago Hillsong spent $55,000 to keep it operational. The existing sewing machine can be sold today for $242,003. The new sewing machine would require a one-time, $85,000 training cost. Operating costs would decrease by the following amounts for years 1 to 7: Year 1 $389.700 400,800...
Exercise 12-3 (Video) Hillsong Inc. manufactures snowsuits. Hillsong is considering purchasing a new sewing machine at a cost of $2.45 million. Its existing machine was purchased five years ago at a price of $1.8 million; six months ago, Hillsong spent $55,000 to keep it operational. The existing sewing machine can be sold today for $241,293. The new sewing machine would require a one-time, $85,000 training cost. Operating costs would decrease by the following amounts for years 1 to 7: Year...
Exercise 12-3 (Video) Hillsong Inc. manufactures snowsuits. Hillsong is considering purchasing a new sewing machine at a cost of $2.45 million. Its existing machine was purchased five years ago at a price of $1.8 million; six months ago, Hillsong spent $55,000 to keep it operational. The existing sewing machine can be sold today for $241,533. The new sewing machine would require a one-time, $85,000 training cost. Operating costs would decrease by the following amounts for years 1 to 7: $389,600...
Hillsong Inc. manufactures snowsuits. Hillsong is considering purchasing a new sewing machine at a cost of $2.45 million. Its existing machine was purchased five years ago at a price of $1.8 million; six months ago, Hillsong spent $55,000 to keep it operational. The existing sewing machine can be sold today for $241,846. The new sewing machine would require a one-time, $85,000 training cost. Operating costs would decrease by the following amounts for years 1 to 7: Year 1 2 $390,600...
Hillsong Inc. manufactures snowsuits. Hillsong is considering purchasing a new sewing machine at a cost of $2.45 million. Its existing machine was purchased five years ago at a price of $1.8 million; six months ago, Hillsong spent $55,000 to keep it operational. The existing sewing machine can be sold today for $240,352. The new sewing machine would require a one-time, $85,000 training cost. Operating costs would decrease by the following amounts for years 1 to 7: Year 1 $390,600 2...
Sheridan Inc. manufactures snowsuits. Sheridan is considering purchasing a new sewing machine at a cost of $2.45 million. Its existing machine was purchased five years ago at a price of $1.8 million; six months ago, Sheridan spent $55,000 to keep it operational. The existing sewing machine can be sold today for $241,846. The new sewing machine would require a one-time, $85,000 training cost. Operating costs would decrease by the following amounts for years 1 to 7: Year 1 $390,600 2...
Hillsong Inc, manufactures snowsuits. Hillsong is considering purchasing a new sewing machine at a cost of $2.45 million. Its existing machine was purchased five years ago at a price of $1.8 million; six months ago, Hillsong spent $55,000 to keep it operational. The existing sewing machine can be sold today for $242,006. The new sewing machine would require a one-time, $85,000 training cost. Operating costs would decrease by the following amounts for years 1 to 7: Year 1 $389,300 2...