1. Disregarding the revenue, what is the future value of the machine cost? 2. What is the present value of the revenue in its 10 years of useful life? Is it worth the investment compared to the machine cost? 3. What is the future value of the revenue in its 10 years of useful life? is it worth the investment compared to the future value of the machine cost?
1. Disregarding the revenue, what is the future value of the machine cost? 2. What is the present value of the revenue in its 10 years of useful life? Is it worth the investment compared to the machine cost? 3. What is the future value of the revenue in its 10 years of useful life? is it worth the investment compared to the future value of the machine cost?
Essentials Of Investments
11th Edition
ISBN:9781260013924
Author:Bodie, Zvi, Kane, Alex, MARCUS, Alan J.
Publisher:Bodie, Zvi, Kane, Alex, MARCUS, Alan J.
Chapter1: Investments: Background And Issues
Section: Chapter Questions
Problem 1PS
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A machine costs P30,000 and it has an expected useful life of 10 years. The estimated annual net cash flow of the machine (revenue minus expenses) is P15,000. The interest rate is 5% per year.
1. Disregarding the revenue, what is the future value of the machine cost?
2. What is the present value of the revenue in its 10 years of useful life? Is it worth the investment compared to the machine cost?
3. What is the future value of the revenue in its 10 years of useful life? is it worth the investment compared to the future value of the machine cost?
4. Suppose that at there is a maintenance expense of P5,000 at the first year, P5,500 at the second year, P6,000 at the third year, P6,500 at the fourth year, and P7,000 at the last year. What is the present value of the maintenance expense?
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