After you have owned the machine for 6 years you expect to sell it for scrap for $1,000. (You scrap it at the same time you get the last $3420 return.) What is the present value of the RETURNS at 7B) 3%? 8) 7%? 9) 11%?
After you have owned the machine for 6 years you expect to sell it for scrap for $1,000. (You scrap it at the same time you get the last $3420 return.) What is the present value of the RETURNS at 7B) 3%? 8) 7%? 9) 11%?
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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Transcribed Image Text:After you have owned the machine for 6 years you
expect to sell it for scrap for $1,000. (You scrap
it at the same time you get the last $3420 return.)
What is the present value of the RETURNS at
7B) 3%?
8) 7%?
9) 11%?
![7A) You are in the pizza business and want to buy a new
pizza making machine. The machine costs $15051
today. At the end of each year you own the machine
it will give you returns of $3420 after paying for
maintenance and repairs. [Go on to 7B.]](/v2/_next/image?url=https%3A%2F%2Fcontent.bartleby.com%2Fqna-images%2Fquestion%2F4a44212c-b8b1-4ff0-bde6-3e570916b708%2F80cc6acd-973e-40fa-9280-b5a9ca71a4a4%2F4ivsr2l_processed.jpeg&w=3840&q=75)
Transcribed Image Text:7A) You are in the pizza business and want to buy a new
pizza making machine. The machine costs $15051
today. At the end of each year you own the machine
it will give you returns of $3420 after paying for
maintenance and repairs. [Go on to 7B.]
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