Relaxation Spa Company offers various services, such as facials, laser hair removal and microdermabrasion. Currently, the company
Question:
Relaxation Spa Company offers various services, such as facials, laser hair removal and microdermabrasion. Currently, the company is considering purchasing the following spa equipment:
Laser Hair Removal Machines | Microdermabrasion Machines | Facial Oxygen Units | |
Cost per Machine | $60,850 | $33,620 | $25,240 |
Annual Cash Inflow | $124,800 | $204,170 | $41,270 |
Annual Cash Outflow | $81,800 | $182,200 | $25,800 |
Required Rate of Return | 8% | 17% | 6% |
Useful Life | 5 years | 3 years | 2 years |
Salvage Value | $330 | $360 | $650 |
Assume that each equipment's annual cash flow will occur for the period equal to its useful life.
Do not enter dollar signs or commas in the input boxes.
Use the present values tables in the textbook appendix.
Use the negative sign for negative values.
Round your answers to the nearest whole number.
a) Determine the NPV of each piece of equipment.
Laser Hair Removal Machine: $
Microdermabrasion Machine: $
Facial Oxygen Unit: $
b) For each piece of equipment, determine the maximum acceptable price using the NPV method.
Laser Hair Removal Machine: $
Microdermabrasion Machine: $
Facial Oxygen Unit: $
c) In what year will the initial investment be recovered? Use the cumulative payback method.
Laser Hair Removal Machine: Year
Microdermabrasion Machine: Year
Facial Oxygen Unit: Year