1. A company will have to spend $300000 on new plant in two years from now. Currently investment rates are at a nominal 10%. (a) What single sum should now be invested, if compounding is six-monthly? (b) What is the APR?

1. A company will have to spend $300000 on new plant in two years from now. Currently investment rates are at a nominal 10%. (a) What single sum should now be invested, if compounding is six-monthly? (b) What is the APR?

Principles of Accounting Volume 2

19th Edition

ISBN:9781947172609

Author:OpenStax

Publisher:OpenStax

Chapter11: Capital Budgeting Decisions

Section: Chapter Questions

Problem 5EB: A grocery store is considering the purchase of a new refrigeration unit with an Initial Investment...

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Question

1. A company will have to spend $300000 on new plant in two years from now.
Currently investment rates are at a nominal 10%. (a) What single sum should now be invested, if compounding
is six-monthly?
(b) What is the APR?

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Calculation of the future Value is as follow:

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Part (b) Calculation of APR is as follow:

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