Required information A theft-avoidance locking system has a first cost of $29,500, an AOC of $11,000, and no salvage value after its 3-year life. Assume that you were told the service provided by this asset would be needed for only 5 years. This means that the asset will have to be repurchased and kept for only 2 years. What would its market value, call it M, have to be after 2 years in order to make its annual worth the same as it is for its 3-year life cycle at an interest rate of 10% per year? Determine the market value Musing factors. The market value M is $
Required information A theft-avoidance locking system has a first cost of $29,500, an AOC of $11,000, and no salvage value after its 3-year life. Assume that you were told the service provided by this asset would be needed for only 5 years. This means that the asset will have to be repurchased and kept for only 2 years. What would its market value, call it M, have to be after 2 years in order to make its annual worth the same as it is for its 3-year life cycle at an interest rate of 10% per year? Determine the market value Musing factors. The market value M is $
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:Required information
A theft-avoidance locking system has a first cost of $29,500,
an AOC of $11,000, and no salvage value after its 3-year life.
Assume that you were told the service provided by this asset
would be needed for only 5 years. This means that the asset
will have to be repurchased and kept for only 2 years.
What would its market value, call it M, have to be after 2 years in order to make
its annual worth the same as it is for its 3-year life cycle at an interest rate of
10% per year? Determine the market value Musing factors.
The market value Mis $
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