ACCOUNTING-The following information is available concerning the purchase of a new piece
QUESTION
The following information is available concerning the purchase of a new piece of equipment:
Initial investment ……………. ?
Annual cost savings …………… $50,000
Salvage value in 10 years ……… 10% of original cost of the equipment
Cost of capital ………………. 12%
Life of project ………………. 10 years
The net present value of this investment was calculated to be $16,365.
Calculate the initial investment for this piece of equipment. Do not use decimals in your
answer. Ignore income tax effects.
ANSWER:
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