Demco Products, a company that manufactures stainless steel control valves, has a fund for equipment replacement that contains $500,000. The company plans to spend $85,000 each year on new equipment. (a) Estimate the number of years it will take to reduce the fund to no more than $85,000 at an interest rate of 10% per year. (b) Use the NPER function to determine the exact number of years.
Demco Products, a company that manufactures stainless steel control valves, has a fund for equipment replacement that contains $500,000. The company plans to spend $85,000 each year on new equipment. (a) Estimate the number of years it will take to reduce the fund to no more than $85,000 at an interest rate of 10% per year. (b) Use the NPER function to determine the exact number of years.
Chapter5: The Time Value Of Money
Section: Chapter Questions
Problem 40P
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Question
Demco Products, a company that manufactures
stainless steel control valves, has a fund for equipment
replacement that contains $500,000. The
company plans to spend $85,000 each year on new
equipment. (a) Estimate the number of years it will
take to reduce the fund to no more than $85,000 at
an interest rate of 10% per year. (b) Use the NPER
function to determine the exact number of years.
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