Tamarack Aerospace is buying a used Cessna Citation CJ1 jet for $850,000 which they expect to fly for 3 years before it needs to be replaced. The Cessna’s annual operating cost is $10,000. If Tamarack’s required rate of return is 10%, what is the jet’s EAC? (Round your answer to whole dollars) a. $-346,221 b. $-357,221 c. $-351,798 d. $-353,565 e. $-331,432
Tamarack Aerospace is buying a used Cessna Citation CJ1 jet for $850,000 which they expect to fly for 3 years before it needs to be replaced. The Cessna’s annual operating cost is $10,000. If Tamarack’s required rate of return is 10%, what is the jet’s EAC? (Round your answer to whole dollars) a. $-346,221 b. $-357,221 c. $-351,798 d. $-353,565 e. $-331,432
Chapter10: Project Cash Flows And Risk
Section: Chapter Questions
Problem 12PROB
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Tamarack Aerospace is buying a used Cessna Citation CJ1 jet for $850,000 which they expect to fly for 3 years before it needs to be replaced. The Cessna’s annual operating cost is $10,000. If Tamarack’s required
a. $-346,221
b. $-357,221
c. $-351,798
d. $-353,565
e. $-331,432
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Step 1
The present value is the value of the sum received at time 0 or the current period. It is the value of the sum that will be received in the future period.
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