Problem
Use the given financial statement information to answer the following question:
Existing equipment
Initial cost: $70,000 five years ago
Depreciation: 10 yrs
Salvage value: $10,000
Current market value: $20,000
Annual labor expense: $50,000
Annual net working capital increase: $300 (beginning year 1)
Cost of capital: 5%
What is the current book value of the existing equipment?