Copdog At the end of 2020, Wildhorse Company is conducting an impairment test and needs to develop a fair value estimate for machineryused in its manufacturing operations. Given the nature of Wildhorse's production process, the equipment is for special use. (Nosecondhand market values are available.) The equipment will be obsolete in 2 years, and Wildhorse's accountants have developed thefollowing cash flow information for the equipment.Year202120222022Net Cash FlowEstimate$6,0709,490$(540)2,0204,220Scrap value$540960ProbabilityAssessment40%60%20%60%20%50%50%Click here to view factor tablesUsing expected cash flow and present value techniques, determine the fair value of the machinery at the end of 2020. Use a 5%discount rate. Assume all cash flows occur at the end of the year. (Round factor values to 5 decimal places, e.g. 1.25124 and final answer toO decimal places, e.g. 458,581.)Fair value of the machinery at the end of 2020$+A10379

To calculate the fair value of the machinery with cashflow using the present value techniques , the…

Answered: At the end of 2020, Wildhorse Company…

Excel Applications for Accounting Principles

4th Edition

ISBN:9781111581565

Author:Gaylord N. Smith

Publisher:Gaylord N. Smith

Chapter26: Capital Budgeting (capbud)

Section: Chapter Questions

Problem 5R

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