Homework Help is Here – Start Your Trial Now!
Business
Finance
A machine is to be purchased for P155,000 it has an estimated life of 8 years and a salvage value of P6000. A sinking fund is to be established so money will be available to purchase a replacement when the first machine wears out at the end of 8 years. An amount of P14,008 is to be deposited at the end of each year during the lifetime of the first machine into this sinking fund. What interest rate (%) that this fund must earn to produce sufficient fund to purchase the replacement machine at the end of 8 years? Select one: a. 12% b. 9% c. 8% d. 10%

A machine is to be purchased for P155,000 it has an estimated life of 8 years and a salvage value of P6000. A sinking fund is to be established so money will be available to purchase a replacement when the first machine wears out at the end of 8 years. An amount of P14,008 is to be deposited at the end of each year during the lifetime of the first machine into this sinking fund. What interest rate (%) that this fund must earn to produce sufficient fund to purchase the replacement machine at the end of 8 years? Select one: a. 12% b. 9% c. 8% d. 10%

Fundamentals Of Financial Management, Concise Edition (mindtap Course List)
Fundamentals Of Financial Management, Concise Edition (mindtap Course List)
10th Edition
ISBN:9781337902571
Author:Eugene F. Brigham, Joel F. Houston
Publisher:Eugene F. Brigham, Joel F. Houston
Chapter12: Cash Flow Estimation And Risk Analysis
Section: Chapter Questions
Problem 10P: Dauten is offered a replacement machine which has a cost of 8,000, an estimated useful life of 6...
See similar textbooks
icon
Related questions
Question
A machine is to be purchased for P155,000 it has an estimated life of 8 years and a salvage value of P6000. A sinking fund is to be established so money will be available to purchase a replacement when the first machine wears out at the end of 8 years. An amount of P14,008 is to be deposited at the end of each year during the lifetime of the first machine into this sinking fund. What interest rate (%) that this fund must earn to produce sufficient fund to purchase the replacement machine at the end of 8 years? Select one: a. 12% b. 9% c. 8% d. 10%
Expert Solution
steps

Step by step

Solved in 3 steps with 2 images

SEE SOLUTIONCheck out a sample Q&A here
Blurred answer
Similar questions
Recommended textbooks for you
Fundamentals Of Financial Management, Concise Edi…
Fundamentals Of Financial Management, Concise Edi…
Finance
ISBN:
9781337902571
Author:
Eugene F. Brigham, Joel F. Houston
Publisher:
Cengage Learning
EBK CONTEMPORARY FINANCIAL MANAGEMENT
EBK CONTEMPORARY FINANCIAL MANAGEMENT
Finance
ISBN:
9781337514835
Author:
MOYER
Publisher:
CENGAGE LEARNING - CONSIGNMENT
Principles of Accounting Volume 2
Principles of Accounting Volume 2
Accounting
ISBN:
9781947172609
Author:
OpenStax
Publisher:
OpenStax College
Cornerstones of Cost Management (Cornerstones Ser…
Cornerstones of Cost Management (Cornerstones Ser…
Accounting
ISBN:
9781305970663
Author:
Don R. Hansen, Maryanne M. Mowen
Publisher:
Cengage Learning
Principles of Accounting Volume 1
Principles of Accounting Volume 1
Accounting
ISBN:
9781947172685
Author:
OpenStax
Publisher:
OpenStax College
Financial Accounting Intro Concepts Meth/Uses
Financial Accounting Intro Concepts Meth/Uses
Finance
ISBN:
9781285595047
Author:
Weil
Publisher:
Cengage
SEE MORE TEXTBOOKS