A company must purchase a new machine to increase production. The machine will cost $50,000 to purchase. The following are the remaining cash flows of the machine and its probabilities. The machine is supposed to be used for 6 years and the MARR is 10%. Annual Cost Annual Revenue Calculate the Present Worth. Probability .2 .6 .2 .6 4 Outcome $3,000 $4,500 $5,500 $35,000 $40,000

A company must purchase a new machine to increase production. The machine will cost $50,000 to purchase. The following are the remaining cash flows of the machine and its probabilities. The machine is supposed to be used for 6 years and the MARR is 10%. Annual Cost Annual Revenue Calculate the Present Worth. Probability .2 .6 .2 .6 4 Outcome $3,000 $4,500 $5,500 $35,000 $40,000

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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Question

A company must purchase a new machine to increase production. The machine will cost
$50,000 to purchase. The following are the remaining cash flows of the machine and its
probabilities. The machine is supposed to be used for 6 years and the MARR is 10%.
Annual Cost
Annual Revenue
Calculate the Present Worth.
Probability
.2
.6
.2
.6
.4
Outcome
$3,000
$4,500
$5,500
$35,000
$40,000

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