The buyer of a certain machine may pay either 200,000 cash down payment and 200,000 annually for the next 6 years, or pay 350, 000 cash and 200, 000 annually for the next five years. If the money is worth 12% compounded annually, which method of payment is better for the buyer and by how much?
The buyer of a certain machine may pay either 200,000 cash down payment and 200,000 annually for the next 6 years, or pay 350, 000 cash and 200, 000 annually for the next five years. If the money is worth 12% compounded annually, which method of payment is better for the buyer and by how much?
Chapter11: Capital Budgeting Decisions
Section: Chapter Questions
Problem 4EA: Assume a company is going to make an investment of $450,000 in a machine and the following are the...
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Answer and draw the cashflow diagram
The buyer of a certain machine may pay either 200,000 cash down payment and 200,000 annually for the next 6 years, or pay 350, 000 cash and 200, 000 annually for the next five years. If the money is worth 12% compounded annually, which method of payment is better for the buyer and by how much?
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