Essay
A new machine tool is expected to generate receipts as follows: $5,000 in year one; $3,000 in year two, nothing in the next year, and $2,000 in the fourth year. At an interest rate of 6%, what is the present value of these receipts?
Is this a better present value than $2,500 each year over four years?
Explain.
Correct Answer:
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5,000 x .943 + 3,000 x .890 + 2,000 x .7...View Answer
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