A company expects to retire an existing machine at the end of 1993 and will replace it with a new machine for the same task at an estimated cost of P60,000. The old machine is expected to be sold for P5,000 when it is replaced. To provide for replacement, the company intends to deposit the following amounts in an account earning interest at 8% compounded quarterly: P20,000 at the end of 1990 P15,000 at the end of 1991 P10,000 at the end of 1992 What additional amount is needed at the end of 1993 to purchase the new machine?
A company expects to retire an existing machine at the end of 1993 and will replace it with a new machine for the same task at an estimated cost of P60,000. The old machine is expected to be sold for P5,000 when it is replaced. To provide for replacement, the company intends to deposit the following amounts in an account earning interest at 8% compounded quarterly: P20,000 at the end of 1990 P15,000 at the end of 1991 P10,000 at the end of 1992 What additional amount is needed at the end of 1993 to purchase the new machine?
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 company expects to retire an existing machine at the end of 1993 and will replace it with a
new machine for the same task at an estimated cost of P60,000. The old machine is expected to
be sold for P5,000 when it is replaced. To provide for replacement, the company intends to
deposit the following amounts in an account earning interest at 8% compounded quarterly:
P20,000 at the end of 1990
P15,000 at the end of 1991
P10,000 at the end of 1992
What additional amount is needed at the end of 1993 to purchase the new machine?
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