A refrigeration equipment fabricator sold and ice drop making machine with the condition that in case the machine will not be able to produce theguaranteed capacity, he will deduct from the agreed price of the machine the loss of revenue that the buyer will incur during the economic life of themachine which is set at 5 years, plus 12% cost of money. One month after the machine was delivered, the buyer complained to the fabricator that heis not getting the guaranteed production. After a series of tests, it was determined that the buyer would be losing P4,000 worth of unrealized sales peryear. Assuming no increase in operation cost if guaranteed production were attained, how much must the buyer deduct from the agreed price of themachine? Neglecting the one month deduct.O P 12.000.00P 15,000.89P14,419.10P16,657.90

Present value (PV) is the current value of the future sum of money or stream of cash flows at a…

Answered: A refrigeration equipment fabricator…

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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