You Are Given the Following Present Value Factors at 8

question 11

Essay

You are given the following present value factors at 8 percent,the Rogers Company's minimum desired rate of return:

The Rogers Company is considering the replacement of a piece of equipment.The old machine has a carrying value of $800 and a remaining estimated life of five years,with no residual value at that time.Present residual value is $200.The new equipment will cost $1,200,including transportation and installation.It has an estimated life of five years,with no residual value at the end of that time.Annual cash operating costs are $400 for the old machine and $150 for the new machine.(Round your answers to two decimal places. )
a.Compute the present value of the operating cash outflows for the old machine.
b.Compute the present value of the operating cash outflows for the new machine.
c.Compute the present value of the cash operating savings if the new machine is purchased.
d.What is the net present value of the replacement alternative?

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Definitions:

Final Surrender

The act of officially ending conflict by conceding defeat, often marked by the signing of a document or public declaration, signaling the cessation of hostilities.

Civil War

A war between citizens of the same country, famously referring to the American Civil War from 1861 to 1865, which was fought over the issues of states' rights and slavery.

April, 1865

A significant month during the American Civil War, marked by the surrender of Confederate General Robert E. Lee, effectively ending the war.

Election of 1860

The 19th presidential election in the United States, resulting in Abraham Lincoln's victory, which precipitated the American Civil War.