Lamar Company invested in an eqipment in a project with 8 years life and require
ID: 2505156 • Letter: L
Question
Lamar Company invested in an eqipment in a project with 8 years life and required $240,000. At the end of the 8th year, the project will be determined and the group will have 0 salvage value
Sales $300,000
Valiable expense $180,000
Contribution Margin $120000
Marketing Expense $70,000
Depreciation $30,000
Net Operating Income $20,000
Lamars discount rate is 12%. If the discount rate and the present value of an annuity of $1 at 12% for 8 years is 4.968 what is the present value of the salvage value?
PLEASE EXPLAIN HOW YOU GOT THE ANSWER
Explanation / Answer
Salvage value =0
the present value of the salvage value = 0*annuity factor = 0*4.968 = 0
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