An investment of RM20,000 can be made in a project that will produce a uniform annual revenue of RM7,310 for seven years and then have a market (salvage) value of RM6,000. Expenses will be RM3,100 in second year and RM2,000 in third year. Second investment of RM4, 000 in fifth years was made to increase the project operation. The company is willing to accept any project that will earn 10% per year or more before incomes taxes, on all invested capital. Show whether this is desirable investment by using the Present Worth method.
An investment of RM20,000 can be made in a project that will produce a uniform annual revenue of RM7,310 for seven years and then have a market (salvage) value of RM6,000. Expenses will be RM3,100 in second year and RM2,000 in third year. Second investment of RM4, 000 in fifth years was made to increase the project operation. The company is willing to accept any project that will earn 10% per year or more before incomes taxes, on all invested capital. Show whether this is desirable investment by using the Present Worth method.
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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An investment of RM20,000 can be made in a project that will produce a uniform
annual revenue of RM7,310 for seven years and then have a market (salvage) value of
RM6,000. Expenses will be RM3,100 in second year and RM2,000 in third year.
Second investment of RM4, 000 in fifth years was made to increase the project
operation. The company is willing to accept any project that will earn 10% per year or
more before incomes taxes, on all invested capital. Show whether this is desirable
investment by using the Present Worth method.
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