You are trying to justify a purchase of a machine for your boss and you have the below information. Compute the Present Equivalent/Present Worth of the machine to help justify its purchase. Your boss would like to see your computation rounded to the nearest $1,000 dollars. Select the Present Equivalent amount from the choices below. Machine Initial cost $ 6,500,000 Service life 6 years Salvage value $ 500,000 Net annual operating costs $ 1,800,000 Net annual revenue from machine $ 3,500,000 Minimum Attractive Rate of Return 12% (MARR) $643,000 $680,000 $743,000 None of the above
You are trying to justify a purchase of a machine for your boss and you have the below information. Compute the Present Equivalent/Present Worth of the machine to help justify its purchase. Your boss would like to see your computation rounded to the nearest $1,000 dollars. Select the Present Equivalent amount from the choices below. Machine Initial cost $ 6,500,000 Service life 6 years Salvage value $ 500,000 Net annual operating costs $ 1,800,000 Net annual revenue from machine $ 3,500,000 Minimum Attractive Rate of Return 12% (MARR) $643,000 $680,000 $743,000 None of the above
Chapter1: Financial Statements And Business Decisions
Section: Chapter Questions
Problem 1Q
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Transcribed Image Text:You are trying to justify a purchase of a machine for your boss and you have the below information.
Compute the Present Equivalent/Present Worth of the machine to help justify its purchase. Your
boss would like to see your computation rounded to the nearest $1,000 dollars. Select the Present
Equivalent amount from the choices below.
Machine
Initial cost
2$
6,500,000
Service life
6 years
Salvage value
2$
500,000
Net annual operating costs
$
1,800,000
Net annual revenue from machine
2$
3,500,000
Minimum Attractive Rate of Return
12%
(MARR)
$643,000
$680,000
$743,000
None of the above
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