Question: Tables: Lakeside, Inc., is considering replacing old production equipm

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Lakeside, Inc., is considering replacing old production equipment with state-of-the-art technology that will allow production cost savings of $10,000 per month. The new equipment will have a five-year life and cost $450,000, with an estimated salvage value of $30,000 Lakeside's cost of capital is 8%, Table64 and Table 6-5 (Use appropriate factor(s) from the tables provided. Round the PV factors to 4 decimals.) Required Calculate the net present value of the new production equipment. Net present value

Explanation / Answer

Present value of annual cash flows 479124 =120000*3.9927 Present value of salvage value 20418 =30000*0.6806 Less: Investment cost -450000 Net present value 49542

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