What would the amount of cash flows be? Product A Product B Initial Investment: Cost of Equipment
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Question:
What would the amount of cash flows be?
Product A | Product B | |
Initial Investment: | ||
Cost of Equipment (zero salvage value) | $170,000 | $380,000 |
Annual Revenues and costs: | ||
Sales Revenue: | $250,000 | $350,000 |
Variable Expenses: | $120,000 | $170,000 |
Depreciation Expense: | $34,000 | $76,000 |
Fixed out-of-pocket operating costs: | $70,000 | $50,000 |
Item | Periods | Amount of Cash Flows |
Product A: | ||
Purchase of equipment | $170,000 | |
Net annual cash inflows (above) | $60,000 | |
Net Present Value: | ||
Product B: | ||
Purchase of equipment | $380,000 | |
Net annual cash inflows (above) | $130,000 | |
Net Present Value: |
Related Book For
Accounting concepts and applications
ISBN: 978-0538745482
11th Edition
Authors: Albrecht Stice, Stice Swain
Posted Date: