Alpha Company is planning to invest in a machine, the use of which will result in the following:• Annual revenues of $ l 0.000 in the first year and increases of $5,000 eachyear. up to year 9. From year IO. the revenues will remain constant ($52,000)for an indefinite period.• The machine is to be overhauled every 10 years. TI1c expense for each overhaul is $40.000.If Alpha expects a present worth of at least $100,000 at a MARR of 10% forthis project. what is the maximum investment that Alpha should be prepared to make?(a) $250.140(b) $67.697(c) $350, 100(d) $509.600
Alpha Company is planning to invest in a machine, the use of which will result in the following:• Annual revenues of $ l 0.000 in the first year and increases of $5,000 eachyear. up to year 9. From year IO. the revenues will remain constant ($52,000)for an indefinite period.• The machine is to be overhauled every 10 years. TI1c expense for each overhaul is $40.000.If Alpha expects a present worth of at least $100,000 at a MARR of 10% forthis project. what is the maximum investment that Alpha should be prepared to make?(a) $250.140(b) $67.697(c) $350, 100(d) $509.600
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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Alpha Company is planning to invest in a machine, the use of which will result in the following:
• Annual revenues of $ l 0.000 in the first year and increases of $5,000 each
year. up to year 9. From year IO. the revenues will remain constant ($52,000)
for an indefinite period.
• The machine is to be overhauled every 10 years. TI1c expense for each overhaul is $40.000.
If Alpha expects a present worth of at least $100,000 at a MARR of 10% for
this project. what is the maximum investment that Alpha should be prepared to make?
(a) $250.140
(b) $67.697
(c) $350, 100
(d) $509.600
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