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What is the net present value of a capital project to buy new equipment for replacing old equipment, given the following data and a minimum return of 12%? Ignore income taxes. Old New
Equipment Equipment
Purchase price $21,600 $36,000
Accumulated amortization 7,200 0
Remaining useful life (years) 8 8
Current salvage value 12,000 0
Salvage value in 8 years 1,000 2,000
Annual operating costs 14,000 8,000
Total Annual Cost
The sum of all expenses incurred by a business or operation over the course of a year.
Current System
The existing set of procedures, processes, technologies, and methods that are in use within an organization or system.
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Stocks of completed products ready for sale or distribution to customers.
FedEx
An American multinational delivery services company known for its overnight shipping service and pioneering a system that could track packages and provide real-time updates on package location.
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