A company wishes to buy new equipment for 85000 the

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Reference no: EM13583961

A company wishes to buy new equipment for $85,000. The equipment is expected to generate an additional $35,000 in cash inflows for four years. All cash flows occur at year-end. A bank will make an $85,000 loan to the company at a 10% interest rate so that the company can purchase the equipment. Use the table below to determine break-even time for this equipment.

year Present Value of 1 at 10%

0 1.0000

1 0.9091

2 0.8264

3 0.7513

4 0.6830

Reference no: EM13583961

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