You run an online business and you are considering an upgrade to your website. The upgrade will cost you a one-time fee of $8,000 today. You expect that the upgrade will generate an additional profit flow of $5,000 per year. (This income stream is continuous and constant.) Assume that the interest rate is 8% compounded continuously. How long will it take for the upgrade to "pay for itself"? In other words, over what period of time will the present value of the additional profit generated by the upgrade be equal to the cost of the upgrade itself?

You run an online business and you are considering an upgrade to your website. The upgrade will cost you a one-time fee of $8,000 today. You expect that the upgrade will generate an additional profit flow of $5,000 per year. (This income stream is continuous and constant.) Assume that the interest rate is 8% compounded continuously. How long will it take for the upgrade to "pay for itself"? In other words, over what period of time will the present value of the additional profit generated by the upgrade be equal to the cost of the upgrade itself?

FINANCIAL ACCOUNTING

10th Edition

ISBN:9781259964947

Author:Libby

Publisher:Libby

Chapter1: Financial Statements And Business Decisions

Section: Chapter Questions

Problem 1Q

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