A company plans to purchase an asset in four years at a price of $180,000. How much has to be deposited now in an account that earns 8% to have enough money buy the asset in the future?
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A company plans to purchase an asset in four years at a price of $180,000. How much has to be deposited now in an account that earns 8% to have enough money buy the asset in the future?
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- Conestoga Plumbing plans to invest in a new pump that is anticipated to provide annual savings for 10 years of $50,000. The pump can be sold at the end of the period for $100,000. What is the present value of the investment in the pump at a 9% interest rate given that savings are realized at year end?How many years will it take Rexchem, Inc. to accumulate $400,000 for a chemical feeder if the company deposits $50,000 each year, starting one year from now, into an account that earns interest at 12% per year?A company needs to buy a building in 4 years, and must fund the down payment from its profits. The purchase will cost $280,000, of which the company can finance (borrow from the bank) $200,000 at 7%. If the company must make the purchase in 4 years and can receive 7% APR on its savings compounded annually, how much must the company save each year to have the required down payment in 4 years?
- You plan to make a lump-sum deposit of $5000 now into an investment account that pays 6% per year, and you plan to withdraw an equal end-of-year amount of $1000 for 5 years, starting next year. At the end of the sixth year, you plan to close your account by withdrawing the re- maining money. Define the engineering economy symbols involved.You own a financial asset that makes the first payment in 3 years and 6 months from now.The asset will make semi-annual payments of $20 for 2 years(four payments).Suppose that the annual discount rate is estimated at 20%.What is the PV of the financial asset?A firm, whose cost of capital is 8 percent, may acquire equipment for $146,825 and rent it to someone for a period of five years. Note: Although payment of rent is typically considered to be an annuity due, treat it as an ordinary annuity when completing this problem in a spreadsheet or when using present value factors. If the firm charges $38,730 annually to rent the equipment, what are the net present value and the internal rate of return on the investment? Use Appendix D to answer the questions. Use a minus sign to enter negative values, if any. Round your answers for the net present value to the nearest dollar and for the internal rate of return to the nearest whole number. NPV: $ IRR: % Should the firm acquire the equipment? The firm acquire the equipment as the net present value is , and the internal rate of return the firm's cost of capital. If the equipment has no estimated residual value, what must be the minimum annual rental charge for the firm to earn the required 8…
- What is the future worth six years from now of a present cost of $375,000 to Corning, Inc. at an interest rate of 10% per year?If a company will pay $75,000 for a truck that will increase deliveries to be made which will give an additional $10,000 in revenue each year for 10 years, should the company buy it? Interest rates are 4%. Show your mathA real estate property is on the market. You have estimated it will give you net cash flows of $5136 per month. You hope to sell it in 9 years for $308182. Your required return is 9.46%, how much should you be willing to pay for the property today? Answer:
- A company plans on purchasing a new piece of equipment in six years. The equipment is expected to cost $200,000. In planning for this purchase, the company will deposit an amount of money into an investment account earning 8% compounded annually. Using an 8% interest rate, the implied annual interest is $200,000 x 0.08 = $16,000. The following information is given: Assuming an annual interest rate of 8% for six years is appropriate, the present value of the deposit is $200,000 x 0.63017 = $126,034. Assuming an annual interest rate of 8% for eight years is appropriate, the present value of the deposit is $200,000 x 0.54027 = $108,054. Assuming an annual interest rate of 6% for eight years is appropriate, the present value of the deposit is $200,000 x 0.62741 = $125,482. How much does this company need to deposit today? $108,054 $126,034 $125,482 $104,000A business is planning to purchase a piece of equipment that will produce a continuous stream of income for 8 years with rate of flow f(t) = 9,000. If the continuous income stream earns 6.65%, compounded continuously, what single deposit into an account earning the same interest rate wi produce the same future value as the continuous income stream? (This deposit is called the present value of the continuous income stream.) What is the future value of the investment? $ (Round to the nearest dollar as needed.) What is the present value of the investment? (Round to the nearest dollar as needed.)A firm buys a new piece of equipment for $28,808, and will receive a cash flow of $3,700 per year for fourteen years. What is the IRR? (Use a Financial calculator to arrive at the answers. Round the final answer to the nearest whole percent.) IRR %
