Kerwin Company is considering a purchase of equipment that costs $50,000.If the useful life is expected to be 5 years and Kerwin's required rate of return is 12%,what is the minimum annual cash inflow that the equipment must offer for the investment to be acceptable? (PV of $1 and PVA of $1)(Use appropriate factor(s)from the tables provided.Do not round your intermediate calculations.Round your final answer to the nearest dollar.)

Question

Quizplus · Accepted Answer

To find the minimum annual cash inflow, we need to calculate the present value annuity (PVA) that equals the cost of the equipment. The formula to find the annual cash inflow is: Cost = PVA * PVA Factor. The PVA factor for 5 years at 12% (from PVA of $1 table) is approximately 3.605. Therefore, $50,000 = Annual Cash Inflow * 3.605. Solving for the Annual Cash Inflow gives us approximately $13,870.

Kerwin Company Is Considering a Purchase of Equipment That Costs