Logo
Home Study Material Contact Search
AI Chat FREE
  1. business
  2. accounting
  3. lukow products is investigating the purchase of au

Lukow Products is Investigating the purchase of automated equipment that will save $130,000 each year...

70.2K

Verified Solution

Question

Accounting

image Lukow Products is Investigating the purchase of automated equipment that will save $130,000 each year In direct labor and Inventory carrylng costs. This equipment costs $840,000 and is expected to have a 5-year useful life with no salvage value. The company's required rate of return is 9% on all equipment purchases. Management expects this equipment to provide Intangible benefits such as greater flexibility and higher-quality output that will Increase future cash Inflows. Click here to view Exhiblt 14B-1 and Exhiblt 14B-2, to determine the approprlate discount factor(s) using table. Requlred: 1. What is the net present value of the plece of equipment before considering Its Intanglble benefits? Note: Enter negatlve amount with a minus sign. Round your final answer to the nearest whole dollar amount. 2. What minimum dollar value per year must be provided by the equipment's Intanglble benefits to Justlfy the $840,000 Investment? Note: Do not round Intermedlate calculatlons. Round your answer to the nearest whole dollar amount

Answer & Explanation Solved by verified expert
Get Answers to Unlimited Questions

Join us to gain access to millions of questions and expert answers. Enjoy exclusive benefits tailored just for you!

Membership Benefits:
  • Unlimited Question Access with detailed Answers
  • Zin AI - 3 Million Words
  • 10 Dall-E 3 Images
  • 20 Plot Generations
  • Conversation with Dialogue Memory
  • No Ads, Ever!
  • Access to Our Best AI Platform: Flex AI - Your personal assistant for all your inquiries!
Become a Member

Other questions asked by students