Lakeside Incorporated is considering replacing old production equipment with state-of- the-art technology that will allow production cost savings of $7,500 per month. The new equipment will have a five-year life and cost $315,000, with an estimated salvage value of $30,000. Lakeside's cost of capital is 8%. Table 6-4 and Table 6- 5. Required: Calculate the present value ratio of the new production equipment. Note: Use appropriate factor(s) from the tables provided. Round the PV factors to 4 decimals. Round your answer to 2 decimal places.

Lakeside Incorporated is considering replacing old production equipment with state-of- the-art technology that will allow production cost savings of $7,500 per month. The new equipment will have a five-year life and cost $315,000, with an estimated salvage value of $30,000. Lakeside's cost of capital is 8%. Table 6-4 and Table 6- 5. Required: Calculate the present value ratio of the new production equipment. Note: Use appropriate factor(s) from the tables provided. Round the PV factors to 4 decimals. Round your answer to 2 decimal places.

EBK CONTEMPORARY FINANCIAL MANAGEMENT

14th Edition

ISBN:9781337514835

Author:MOYER

Publisher:MOYER

Chapter9: Capital Budgeting And Cash Flow Analysis

Section: Chapter Questions

Problem 18P

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