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Flo's Frozen Yogurt shop is evaluating new dispensing machines. The Flownator has a first cost of $30126...

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Finance

Flo's Frozen Yogurt shop is evaluating new dispensingmachines.

The Flownator has a first cost of $30126 and annual expenses of$9957 that will increase by $569 per year. It will require anoverhaul at the end of year 4 at a cost of $5201. The Flownatorwill save $19547 per year in labor costs. The Flownator has asalvage value of $9942 and a lifespan of 10 years.

The YogGoo300 has a first cost of $24636 and annual expenses of$3568 that will increase by 2% per year. The YogGoo300 will saveFlo's $11045 per year in labor costs. The YogGoo300 has a lifespanof 4 years.

What must the salvage value of the YogGoo30 be to make itequally desirable to the Flownator? Use a MARR of 2% to make yourcalculation.

Answer & Explanation Solved by verified expert
4.4 Ratings (726 Votes)
ANALYSIS OF CASH FLOWS OF FLOWNATORPresent ValuePV of cash flowsCashflow1iNNYear of cash flowidiscount    See Answer
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