Question

Heels, a shoe manufacturer, is evaluating the costs and benefits of new equipment that would custom fit each pair of athletic shoes. The customer would have his or her foot scanned by digital computer equipment; this information would be used to cut the raw materials to provide the customer a perfect fit. The new equipment costs $111,000 and is expected to generate an additional $44,000 in cash flows for 5 years. A bank will make a $111,000 loan to the company at a 12% interest rate for this equipment's purchase and compute the recovery time for both the payback period and break-even time. (PV of $1, FV of $1, PVA of $1, and FVA of $1) (Use appropriate factor(s) from the tables provided.) Complete this question by entering your answers in the tabs below. Payback Period Break even time Compute the recovery time for the payback period. Payback Period Choose Numerator: 1 Choose Denominator: Payback Period Payback period

Answer 1

And Initial investment = Annual cash inflows = Life of project = Discount date = Computation of recovery time $ 111,000 $44000 5 yrs ! 12 % for payback period

'we kondu pay back period= Initial investment Annual cash inflows . pay back period = 111000 4400 = 2.52 years Computation of decovery i = 12% Year Cash inflow X 0 ($111000) X $44000 x 44000 44000 x 44000 x 4400 X x x time for break Even time PV PU Factor = Present value Commudativet 1.0 = ($111,000) 0.8929 = 39288 ($717122 0.7972 = 35077 ($ 36635) 0-7418 = 31319 $5316 0.655 = 27962 $22646 0.5674 = 2 966 $47612 x or w po Break Even time = 3 yea + 5316 27962 = 3.19 years Thank you
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