A machine is to be purchased for Php155,000; it has an estimated life of 8 years and a salvage value of Php 6,000. A sinking fund is to be established so the money will be available to purchase a replacement when the first machine wears out at the end of 8 years. An amount of Php13,030 is to be deposited at the end of each year during the lifetime of the first machine into the sinking fund. The interest rate (%) this fund must earn to produce sufficient funds to purchase the replacement machine at the end of eight years is closest to?
A machine is to be purchased for Php155,000; it has an estimated life of 8 years and a salvage value of Php 6,000. A sinking fund is to be established so the money will be available to purchase a replacement when the first machine wears out at the end of 8 years. An amount of Php13,030 is to be deposited at the end of each year during the lifetime of the first machine into the sinking fund. The interest rate (%) this fund must earn to produce sufficient funds to purchase the replacement machine at the end of eight years is closest to?
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 machine is to be purchased for Php155,000; it has an estimated life of 8 years and a salvage value of Php 6,000. A sinking fund is to be established so the money will be available to purchase a replacement when the first machine wears out at the end of 8 years. An amount of Php13,030 is to be deposited at the end of each year during the lifetime of the first machine into the sinking fund. The interest rate (%) this fund must earn to produce sufficient funds to purchase the replacement machine at the end of eight years is closest to?
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