An asset costs $165,000 and will generate cash benefits of $42,000 at the end of each year for six years Salvage value s are $75,000, $50,000, $40,000, $30,000 and $10,000 at the end of years 2, 3, 4, 5 and 6 respectively The required return is 7 percent Assuming that this asset can be replicated E...

Summarize the information Cost of asset 165000 Cash benefit at the end of year 42000 per year Salvag ...

An asset costs $165,000 and will generate cash benefits of $42,000 at the end of each year

Question:

An asset costs $165,000 and will generate cash benefits of $42,000 at the end of each year for six years. s are $75,000, $50,000, $40,000, $30,000 and $10,000 at the end of years 2, 3, 4, 5 and 6 respectively. The required return is 7 percent. Assuming that this asset can be replicated.
Equivalent if abandoned after 2 years ______________
Equivalent if abandoned after 3 years ______________
Equivalent if abandoned after 4 years ______________
Equivalent if abandoned after 5 years ______________
Equivalent if abandoned after 6 years ______________
When is the optimal time to abandon the investment?
Salvage Value
Salvage value is the estimated book value of an asset after depreciation is complete, based on what a company expects to receive in exchange for the asset at the end of its useful life. As such, an asset’s estimated salvage value is an important... Annuity
An annuity is a series of equal payment made at equal intervals during a period of time. In other words annuity is a contract between insurer and insurance company in which insurer make a lump-sum payment or a series of payment and, in return,...