A machine costing $24,000 to buy and $3,500 per year to operate will save mainly labor expenses in packaging over eight years. The anticipated salvage value of the machine at the end of eight years is $6,500. Click the icon to view the interest factors for discrete compounding when i = 13% per year. (a) If a 13% return on investment (rate of return) is desired, what is the minimum required annual savings in labor from this machine? The minimum required annual savings in labor from this machine is $ 7,992. (Round to the nearest dollar.)
A machine costing $24,000 to buy and $3,500 per year to operate will save mainly labor expenses in packaging over eight years. The anticipated salvage value of the machine at the end of eight years is $6,500. Click the icon to view the interest factors for discrete compounding when i = 13% per year. (a) If a 13% return on investment (rate of return) is desired, what is the minimum required annual savings in labor from this machine? The minimum required annual savings in labor from this machine is $ 7,992. (Round to the nearest dollar.)
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
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Transcribed Image Text:A machine costing $24,000 to buy and $3,500 per year to operate will save mainly labor expenses in packaging over
eight years. The anticipated salvage value of the machine at the end of eight years is $6,500.
Click the icon to view the interest factors for discrete compounding when i = 13% per year.
(a) If a 13% return on investment (rate of return) is desired, what is the minimum required annual savings in labor from
this machine?
The minimum required annual savings in labor from this machine is $ 7,992. (Round to the nearest dollar.)
(b) If the service life is seven years instead of eight years, what is the minimum required annual savings in labor for the
firm to realize a 13% return on investment?
The minimum required annual savings in labor from this machine is $
(Round to the nearest dollar.)
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