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Category > Accounting Posted 21 Apr 2017 My Price 12.00

salvage value

Hi i need assistance and explanation on how to Calculate the salvage value for this piece of equipment

 

XYZ Company is considering the purchase of a new piece of equipment and has gathered

the following information about the purchase:

 

Initial investment ................   ?

Annual cost savings ............... $20,000

Salvage value in 6 years .......... 20% of original cost of the equipment

Repair in 4 years ................. $11,000

Cost of capital ...................    10%

Life of project ...................   6 years

 

If the new piece of equipment is purchased then the equipment currently being used

can be sold at the time of purchase of the new equipment for $7,000.

 

The net present value of this investment was calculated to be -$28,730.

Calculate the salvage value for this piece of equipment. Do not use decimals in

your answer. Ignore income tax effects.

need to use the present value table factors for this question

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Answers

(15)
Status NEW Posted 21 Apr 2017 01:04 AM My Price 12.00

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