A machine is to be purchased for P155,000 it has an estimated life of 8 years and a salvage value of P6000. A sinking fund is to be established so money will be available to purchase a replacement when the first machine wears out at the end of 8 years. An amount of P14,008 is to be deposited at the end of each year during the lifetime of the first machine into this sinking fund. What interest rate (%) that this fund must earn to produce sufficient fund to purchase the replacement machine at the end of 8
A machine is to be purchased for P155,000 it has an estimated life of 8 years and a salvage value of P6000. A sinking fund is to be established so money will be available to purchase a replacement when the first machine wears out at the end of 8 years. An amount of P14,008 is to be deposited at the end of each year during the lifetime of the first machine into this sinking fund. What interest rate (%) that this fund must earn to produce sufficient fund to purchase the replacement machine at the end of 8
Chapter1: Financial Statements And Business Decisions
Section: Chapter Questions
Problem 1Q
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A machine is to be purchased for P155,000 it has an estimated life of 8 years and a salvage value of P6000. A sinking fund is to be established so money will be available to purchase a replacement when the first machine wears out at the end of 8 years. An amount of P14,008 is to be deposited at the end of each year during the lifetime of the first machine into this sinking fund. What interest rate (%) that this fund must earn to produce sufficient fund to purchase the replacement machine at the end of 8 years?
Select one:
a. 12%
b. 8%
c. 9%
d. 10%
*please do not use excel
*please do not use excel
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