A manager has determined that a particular piece of equipment is likely to increase the cash...
A manager has determined that a particular piece of equipment is likely to increase the cash flow of a business by $10,000 for each of the next five years. What is the present value of this equipment at an interest rate of 10%?
Please explain in detail
Homework Answers
Cash flow of business rise by $10,000 each year
Rate of interest = 10% = 0.1
Present value of cash flow is determined by = Amount / (1 + rate of interest)Years after which payment is received
Assume first payment is received after the end of first year. Present value of first payment is 10,000 / (1 + 0.1)1 = 9,090,9
Present value of second payment is 10,000 / (1 + 0.1)2 = 8,264.46
Present value of third payment is 10,000 / (1 + 0.1)3 = 7,513.14
Present value of forth payment is 10,000 / (1 + 0.1)4 = 6,830.13
Present value of fifth payment is 10,000 / (1 + 0.1)5 = 6,209.21
Total present value of all cash flows = 6,209.21 + 6,830.13 + 7,513.14 + 8,264.46 + 9,090.9 = 37,907.84
Add Answer to:
A manager has determined that a particular piece of equipment is
likely to increase the cash...
You need a particular piece of equipment for your production process. An equipment-leasing company has offered to lease...
You need a particular piece of equipment for your production process. An equipment-leasing company has offered to lease the equipment to you for $10,000 per year if you sign a guaranteed 5-year lease (the lease is paid at the end of each year). The company would also maintain the equipment for you as part of the lease. Alternatively, you could buy and maintain the equipment yourself. The cash flows from doing so are listed below (the equipment has an economic...
You need a particular piece of equipment for your production process. An? equipment-leasing company has offered...
You need a particular piece of equipment for your production process. An? equipment-leasing company has offered to lease the equipment to you for $ 9 500 per year if you sign a guaranteed 5?-year lease? (the lease is paid at the end of each? year). The company would also maintain the equipment for you as part of the lease.? Alternatively, you could buy and maintain the equipment yourself. The cash flows from doing so are listed below? (the equipment has...
You need a particular piece of equipment for your production process. An equipment-leasing compan...
You need a particular piece of equipment for your production process. An equipment-leasing company has offered to lease the equipment to you for $9,500 per year if you sign a guaranteed 5-year lease (the lease is paid at the end of each year). The company would also maintain the equipment for you as part of the lease. Alternatively, you could buy and maintain the equipment yourself. The cash flows from doing so are listed below (the equipment has an economic...
You need a particular piece of equipment for your production process. An equipment-oasing company has pffered...
You need a particular piece of equipment for your production process. An equipment-oasing company has pffered to lease the equipment to you for $10.500 per year you sign a guaranteed 5-year lease the lease is paid at the end of each year. The company would also intain the equipment for you as part of the lease Alternatively, you could buy and maintain the equipment yourself. The cash flows from doing so are listed below the equipment has an economic life...
You need a particular piece of equipment for your production process. An equipment-leasing company has offered...
You need a particular piece of equipment for your production process. An equipment-leasing company has offered to lease the equipment to you for $9,500 per year if you sign a guaranteed 5-year lease (the lease is paid at the end of each year). The company would also maintain the equipment for you as part of the lease Alternatively, you could buy and maintain the equipment yourself. The cash flows from doing so are listed below (the equipment has an economic...
You need a particular piece of equipment for your production process. An equipment-leasing company has offered...
You need a particular piece of equipment for your production process. An equipment-leasing company has offered to lease the equipment to you for $ 10 comma 300 per year if you sign a guaranteed 5-year lease (the lease is paid at the end of each year). The company would also maintain the equipment for you as part of the lease. Alternatively, you could buy and maintain the equipment yourself. The cash flows from doing so are listed below (the equipment...
Engineering Corp. buys a piece of equipment today for $16,000. It will sell it in five...
Engineering Corp. buys a piece of equipment today for $16,000. It will sell it in five years for $4,000. Each year, this piece of equipment lowers costs by S6 o0 but it requires annual maintenance of $3,00 If the annual interest rate were 12%, what would be the present value of this investment?
P 8-31 (similar to) Question Help You need a particular piece of equipment for your production...
P 8-31 (similar to) Question Help You need a particular piece of equipment for your production process. An equipment-leasing company has offered to lease the equipment to you for $10,000 per year if you sign a guaranteed 5-year lease (the lease is paid at the end of each year). The company would also maintain the equipment for you as part of the lease. Alternatively, you could buy and maintain the equipment yourself. The cash flows from doing so are listed...
ABC Company is interested in buying a piece of equipment for $150,000. The average useful life...
ABC Company is interested in buying a piece of equipment for $150,000. The average useful life of the equipment is anticipated to be five years, with projected annual cash flow of $22,000. Calculate the net present value of the equipment at 8%. Assume no salvage value. Please explain the formula as well-I come up with a different answer when I do the formula of $22,000/(1+8%)*2=$40, 740.74; someone else says the answer is $18,861.45
An entrepreneur would like to buy a piece of equipment for his business. The equipment cost...
An entrepreneur would like to buy a piece of equipment for his business. The equipment cost $75,000 and will increase cash flow by $12,000 each year for 15 years. What is his IRR? 13.65% 8.00% 10.92% 12.25%
You need a particular piece of equipment for your production process. An equipment-leasing company has offered to lease the equipment to you for $9,500 per year if you sign a guaranteed 5-year lease (the lease is paid at the end of each year). The company would also maintain the equipment for you as part of the lease. Alternatively, you could buy and maintain the equipment yourself. The cash flows from doing so are listed below (the equipment has an economic...
You need a particular piece of equipment for your production process. An equipment-oasing company has pffered to lease the equipment to you for $10.500 per year you sign a guaranteed 5-year lease the lease is paid at the end of each year. The company would also intain the equipment for you as part of the lease Alternatively, you could buy and maintain the equipment yourself. The cash flows from doing so are listed below the equipment has an economic life...
You need a particular piece of equipment for your production process. An equipment-leasing company has offered to lease the equipment to you for $9,500 per year if you sign a guaranteed 5-year lease (the lease is paid at the end of each year). The company would also maintain the equipment for you as part of the lease Alternatively, you could buy and maintain the equipment yourself. The cash flows from doing so are listed below (the equipment has an economic...
Engineering Corp. buys a piece of equipment today for $16,000. It will sell it in five years for $4,000. Each year, this piece of equipment lowers costs by S6 o0 but it requires annual maintenance of $3,00 If the annual interest rate were 12%, what would be the present value of this investment?
P 8-31 (similar to) Question Help You need a particular piece of equipment for your production process. An equipment-leasing company has offered to lease the equipment to you for $10,000 per year if you sign a guaranteed 5-year lease (the lease is paid at the end of each year). The company would also maintain the equipment for you as part of the lease. Alternatively, you could buy and maintain the equipment yourself. The cash flows from doing so are listed...
Most questions answered within 3 hours.
-
Where is the error in this code sequence?
String s1 = "Hello";
String s2 = "ello";...
asked 10 months ago -
Financial data for Joel de Paris, Inc., for last year
follow:
Joel de Paris, Inc.
Balance...
asked 10 months ago -
Consider this reaction:
Al2(SO4)3 (aq)+ BaCl3
(aq) Al2Cl6 (aq)- +
3BaSO4(s) . What is the...
asked 10 months ago -
Suppose that Savneet is considering increasing her
recent random sample from 20 car rentals to 40...
asked 10 months ago -
Trucks arrive at an unloading terminal at an average rate of 120
per hour.
Trucks arrive...
asked 10 months ago -
Why are methanol and ethanol completely soluble in water while
octanol is not very little soluble....
asked 10 months ago -
A facilities manager at a university reads in a research report
that the mean amount of...
asked 10 months ago -
When the CuSO4 is rehydrated by adding water to the anhydrous
compound, is this an endothermic...
asked 10 months ago -
A ray of sunlight is passing from diamond into crown glass; the
angle of incidence is...
asked 10 months ago -
A block of mass 0.249 kg is placed on top of a light, vertical
spring of...
asked 10 months ago -
how do the kidneys compensate in the presences of acidosis
a) trigger hyperventilate
b) reserve acid...
asked 10 months ago -
Question 501 pts
The rental rate of capital to the firm increases. Which of the
following...
asked 10 months ago