A small oil company wants to replace its Micro Motion Coriolis flowmeters with nickel-based steel alloy flowmeters from the Emerson F-Series. The replacement process will cost the company $50,000 three years from now. How much money must the company set aside each year beginning 1 year from now in order to have the total amount in 3 years? Assume the company earns a generous 20% per year on investment funds.
A small oil company wants to replace its Micro Motion Coriolis flowmeters with nickel-based steel alloy flowmeters from the Emerson F-Series. The replacement process will cost the company $50,000 three years from now. How much money must the company set aside each year beginning 1 year from now in order to have the total amount in 3 years? Assume the company earns a generous 20% per year on investment funds.
Chapter5: The Time Value Of Money
Section: Chapter Questions
Problem 40P
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Question
A small oil company wants to replace its Micro
Motion Coriolis flowmeters with nickel-based
steel alloy flowmeters from the Emerson F-Series.
The replacement
$50,000 three years from now. How much money
must the company set aside each year beginning
1 year from now in order to have the total amount
in 3 years? Assume the company earns a generous
20% per year on investment funds.
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