A device is purchased for $30,000. It yields a $5,000 yearly net profit for first 4 years and then decreases $500 every year after that ($4,500 for 5th year, $4,000 for 6th year, $3,500 for 7th year ….. ). The device is sold after 10 years. What is its minimum selling price after 10 years to break even with i=10%/yr?
A device is purchased for $30,000. It yields a $5,000 yearly net profit for first 4 years and then decreases $500 every year after that ($4,500 for 5th year, $4,000 for 6th year, $3,500 for 7th year ….. ). The device is sold after 10 years. What is its minimum selling price after 10 years to break even with i=10%/yr?
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 device is purchased for $30,000. It yields a $5,000 yearly net profit for first 4 years and then decreases $500 every year after that ($4,500 for 5th year, $4,000 for 6th year, $3,500 for 7th year ….. ). The device is sold after 10 years. What is its minimum selling price after 10 years to break even with i=10%/yr?
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