Salvage Value Assignment
Flo’s Frozen Yogurt shop is evaluating new dispensing machines.
The Flownator has a first cost of $30,896 and annual expenses of $9,058 that will increase by $578 per year. It will require an overhaul at the end of year 4 at a cost of $5,328. The Flownator will save $19,315 per year in labor costs. The Flownator has a salvage value of $8,304 and a lifespan of 11 years.
The YogGoo300O has a first cost of $21,166 and annual expenses of $3,671 that will increase by 4% per year. The YogGoo300 will save Flo’s $10,876 per year in labor costs. The YogGoo300 has a lifespan of 5 years.
What must the salvage value of the YogGoo30 be to make it equally desirable to the Flownator? Use a MARR of 4% to make your calculation.
Enter your answer as follows: 12345
Round your answer. Do not use a dollar sign (“$”), any commas (“”), or a decimal point (“”). Get Finance homework help today