A shoe manufacturer is evaluating new equipment that would custom fit athletic shoes. The new equipment costs $100,000 and will generate $39,000 in net cash flows for five years. (Negative cumulative cash flows should be indicated with a minus sign.) Determine the break-even time for this equipment. Year Initial investment Year 1 Year 2 Year 3 Year 4 Year 5 Present Net Cash Flow x Value of 1 at 10% $ (100,000) x 39,000 x 39,000 X 39,000 x 39,000 x 39,000 x 1.0000 09091 08264 07513 0.6830 = 0.6209 C Present Value of Net Cash Flows S (100,000) $ (Round break-even time answers to two decimal places.) Cumulative Present Value of Net Cash Flows (100,000)

A shoe manufacturer is evaluating new equipment that would custom fit athletic shoes. The new equipment costs $100,000 and will generate $39,000 in net cash flows for five years. (Negative cumulative cash flows should be indicated with a minus sign.) Determine the break-even time for this equipment. Year Initial investment Year 1 Year 2 Year 3 Year 4 Year 5 Present Net Cash Flow x Value of 1 at 10% $ (100,000) x 39,000 x 39,000 X 39,000 x 39,000 x 39,000 x 1.0000 09091 08264 07513 0.6830 = 0.6209 C Present Value of Net Cash Flows S (100,000) $ (Round break-even time answers to two decimal places.) Cumulative Present Value of Net Cash Flows (100,000)

Cornerstones of Cost Management (Cornerstones Series)

4th Edition

ISBN:9781305970663

Author:Don R. Hansen, Maryanne M. Mowen

Publisher:Don R. Hansen, Maryanne M. Mowen

Chapter19: Capital Investment

Section: Chapter Questions

Problem 22E

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