Accounting help problem please

Posted on 2013-11-22 12:59:00 in Accounting by SMILE

chippewa country jail currently has laundry done by a local cleaner at and annual cost of $46000

it is considering a purchase of washers, dryers and presses at a total installed cost of $52000 so

that inmates can do the laundry. the country expects savings of $15000 per year and it expects the

machines to last 5 years. the required rate of return is 10%

answer each part separately

1. compute the npv of the investment in laundry facilities

2. a. suppose the machines last only 4 years. compute the npv

b. suppose the machine last 7 years. compute the npv

3. a. suppose the annual savings are only $12000 compute the npv

b. suppose the annual savings are $18000 compute the npv

4. a. compute the most optimistic estimate of NPV. combining the best outcomes in number 2 and 3

b. compute the most pessimistic estimate of NPV, combining the worst outcomes in numbers 2 and 3

5. accept the expected life estimate of 5 years, what is the minmum annual saving that would justify the investment the laundry facilities?

---

Answer Comment

No Answers Posted Yet.