A small company purchased now for $23,000 will lose $1,200 each year the first four years. An additional $8,000 invested in the company during the fourth year will result in a profit of $5,500 each year from the fifth year through the fifteenth year. At the end of 15 years, the company can be sold for $33,000. The MARR = 12% per year. Calculate the FW?

A small company purchased now for $23,000 will lose $1,200 each year the first four years. An additional $8,000 invested in the company during the fourth year will result in a profit of $5,500 each year from the fifth year through the fifteenth year. At the end of 15 years, the company can be sold for $33,000. The MARR = 12% per year. Calculate the FW?

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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Concept explainers

Production Budget

A budget can be defined as a financial plan designed by an undertaking for a definite period in the future that can contribute towards enhancing the financial success of the business undertaking. It is used to estimate the revenue and expenses. The budget generally takes into account both current and future income and expenses.

Question

> A small company purchased now for $23,000 will lose $1,200 each year the first four
years. An additional $8,000 invested in the company during the fourth year will result
in a profit of $5,500 each year from the fifth year through the fifteenth year. At the
end of 15 years, the company can be sold for $33,000. The MARR = 12% per year.
Calculate the FW?

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