Sweet Acacia Inc. is considering modernizing its production facility by investing in new equipment and selling...

 

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Sweet Acacia Inc. is considering modernizing its production facility by investing in new equipment and selling the old equipment. The following information has been collected on this investment: Cost Old Equipment Accumulated depreciation Remaining life Current salvage value Salvage value in 8 years Annual cash operating costs $80,640 $40,500 Net present value $ 8 years $10,560 $0 $35,400 Cost New Equipment Estimated useful life Salvage value in 8 years Annual cash operating costs $38,400 8 years $4,800 $29,600 Depreciation is $10,080 per year for the old equipment. The straight-line depreciation method would be used for the new equipment over an eight-year period with salvage value of $4,800. Calculate the net present value assuming a 15% rate of return. (Ignore income taxes.) (If the net present value is negative, use either a negative sign preceding the number e.g. -45 or parentheses e.g. (45). For calculation purposes, use 5 decimal places as displayed in the factor table provided, e.g. 1.25124 and final answer to 0 decimal places, e.g. 5,275.) Sweet Acacia Inc. is considering modernizing its production facility by investing in new equipment and selling the old equipment. The following information has been collected on this investment: Cost Old Equipment Accumulated depreciation Remaining life Current salvage value Salvage value in 8 years Annual cash operating costs $80,640 $40,500 Net present value $ 8 years $10,560 $0 $35,400 Cost New Equipment Estimated useful life Salvage value in 8 years Annual cash operating costs $38,400 8 years $4,800 $29,600 Depreciation is $10,080 per year for the old equipment. The straight-line depreciation method would be used for the new equipment over an eight-year period with salvage value of $4,800. Calculate the net present value assuming a 15% rate of return. (Ignore income taxes.) (If the net present value is negative, use either a negative sign preceding the number e.g. -45 or parentheses e.g. (45). For calculation purposes, use 5 decimal places as displayed in the factor table provided, e.g. 1.25124 and final answer to 0 decimal places, e.g. 5,275.)

Answer rating: 100% (QA)

Solution Curve is y x2 Differentiate with respect to ... View the full answer