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Consider a piece of equipment for which the expenditure at the beginning of period 1 is $25,000 The net cost at the end of year 1 is $8,000 The net cost at the end of year 2 is $10,000 The net cost at the end of year 3 is $5,000, which includes salvaging the equipment. The interest rate is 6%. What is the net present cost of this investment over the three year period including the initial purchase of the asset and the other costs from the first three years of operation (including sale of the equipment)?

Consider a piece of equipment for which the expenditure at the beginning of period 1 is $25,000 The net cost at the end of year 1 is $8,000 The net cost at the end of year 2 is $10,000 The net cost at the end of year 3 is $5,000, which includes salvaging the equipment. The interest rate is 6%. What is the net present cost of this investment over the three year period including the initial purchase of the asset and the other costs from the first three years of operation (including sale of the equipment)?

Economics: Private and Public Choice (MindTap Course List)
Economics: Private and Public Choice (MindTap Course List)
16th Edition
ISBN:9781305506725
Author:James D. Gwartney, Richard L. Stroup, Russell S. Sobel, David A. Macpherson
Publisher:James D. Gwartney, Richard L. Stroup, Russell S. Sobel, David A. Macpherson
Chapter27: Investment, The Capital Market, And The Wealth Of Nations
Section: Chapter Questions
Problem 9CQ
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Consider a piece of equipment for which the expenditure at the beginning of period 1 is $25,000 The net cost at the end of year 1 is $8,000 The net cost at the end of year 2 is $10,000 The net cost at the end of year 3 is $5,000, which includes salvaging the equipment. The interest rate is 6%. What is the net present cost of this investment over the three year period including the initial purchase of the asset and the other costs from the first three years of operation (including sale of the equipment)?

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