ABC, Inc., invested in a machine with a useful life of 6 years and no salvage value. The machine was depreciated using the straight-line method and it was expected to produce an annual cash inflow from the operation, net of income taxes, of $2000. The present value of an ordinary annuity of $1 for six periods at 10 per cent is 4.3553. the present value of $1 for six periods at 10 per cent is 0.5645. Assuming that ABC used an internal rate of return of 10 per cent, what was the amount of the original investment?
ABC, Inc., invested in a machine with a useful life of 6 years and no salvage value. The machine was depreciated using the straight-line method and it was expected to produce an annual cash inflow from the operation, net of income taxes, of $2000. The present value of an ordinary annuity of $1 for six periods at 10 per cent is 4.3553. the present value of $1 for six periods at 10 per cent is 0.5645. Assuming that ABC used an internal rate of return of 10 per cent, what was the amount of the original investment?
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
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ABC, Inc., invested in a machine with a useful life of 6 years and no salvage value. The machine was
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