A piece of machinery is projected to provide an income of 125, 000 5000dollars per year with f in I (t) machine is expected to last 12 years. Determine the maximum price that can be paid for the machine when purchased new years. The %3D - assuming you could receive 6% return on the money if you chose to invest the money instead of purchasing the equipment.

A piece of machinery is projected to provide an income of 125, 000 5000dollars per year with f in I (t) machine is expected to last 12 years. Determine the maximum price that can be paid for the machine when purchased new years. The %3D - assuming you could receive 6% return on the money if you chose to invest the money instead of purchasing the equipment.

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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You have just been offered a contract worth $1.01 million per year for 6 years. However, to take the contract, you will need to purchase some new equipment. Your discount rate for this project is 12.3%. You are still negotiating the purchase price of the equipment. What is the most you can pay for the equipment and still have a positive NPV? The most you can pay for the equipment and achieve the 12.3% annual return is $ decimal places.) million. (Round to two
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