A company plans to modernize its facilities in 8 years. They estimate saving $5,000 per month if they sell some of their machines now, and salvage them for $29,700. They also think 4 years from now their current $4,500 per month O & M costs will increase by 0.16% per month until they sell the rest of the machines to modernize. How much capital will they have available to modernize if they place all the savings into an account that pays them a nominal 20.30% rate, compounded 5 periods per year?
A company plans to modernize its facilities in 8 years. They estimate saving $5,000 per month if they sell some of their machines now, and salvage them for $29,700. They also think 4 years from now their current $4,500 per month O & M costs will increase by 0.16% per month until they sell the rest of the machines to modernize. How much capital will they have available to modernize if they place all the savings into an account that pays them a nominal 20.30% rate, compounded 5 periods per year?
Chapter11: Capital Budgeting Decisions
Section: Chapter Questions
Problem 7EB: An auto repair company needs a new machine that will check for defective sensors. The machine has an...
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VIEWCalculation of Effective Annual Rate and Monthly Rate is as follow:
VIEWCalculating the future value of the saving is as follow:
VIEWCalculating the future value of the expenses is as follow:
VIEWCalculation of the capital in account is as follow:
VIEWVerification via excel is as follow:-
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