The VEEtile company aims to have enough money to invest into a new grader equipment in 4 years. If the equipment will cost $250,000, how much should the company allocate now if the account earns a. 10% simple interest? b. 10% compounded semi-annually?

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A: The given answer is correct

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Q: DO IT IN EXCEL, AND SHOW THE FORMULAS If the company purchases the machine, its cost of $276,000…

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Q: how much should it put aside today to achieve its goal?

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Q: What is the NPV of this investment

A:

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A: Hi There, thanks for posting the question. But as per Q&A guidelines, we must answer the first…

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A:

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A: a.

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Present Value

Present value (PV) is defined as the current or present value of all future sums of cash flow or money at a specified rate of return. This rate of return is known as the discounted rate, which is essentially the interest rate, discounted over some time. The expected cash flows are discounted at a discount rate to compute the present value. The higher the discount rate, the higher the future value (FV), but the lower the present value.