You are the finance manager for a particular company. The company plans to purchase $2,000,000 in new assembly line machinery in 5 years. (Use Table 11-1 and Table 11-2. Round your answers to the nearest cent.) (a) How much (in $) must be set aside now at 8% interest compounded semiannually to accumulate the $2,000,000 in 5 years? $ 1,351,128. (b) If the inflation rate on this type of equipment is 5% per year, what will be the cost (in $) of the equipment in 5 years, adjusted for inflation? $ 2,552,563. (c) Use the inflation-adjusted cost of the equipment to calculate how much (in $) must be set aside now. $ (d) Use the present value formula to calculate how much (in $) would be required now if you found a bank that offered 8% interest compounded daily to obtain the value found in part b. (Ignore leap years in calculation.) $ 1,711,109.:

You are the finance manager for a particular company. The company plans to purchase $2,000,000 in new assembly line machinery in 5 years. (Use Table 11-1 and Table 11-2. Round your answers to the nearest cent.) (a) How much (in $) must be set aside now at 8% interest compounded semiannually to accumulate the $2,000,000 in 5 years? $ 1,351,128. (b) If the inflation rate on this type of equipment is 5% per year, what will be the cost (in $) of the equipment in 5 years, adjusted for inflation? $ 2,552,563. (c) Use the inflation-adjusted cost of the equipment to calculate how much (in $) must be set aside now. $ (d) Use the present value formula to calculate how much (in $) would be required now if you found a bank that offered 8% interest compounded daily to obtain the value found in part b. (Ignore leap years in calculation.) $ 1,711,109.:

EBK CONTEMPORARY FINANCIAL MANAGEMENT

14th Edition

ISBN:9781337514835

Author:MOYER

Publisher:MOYER

Chapter9: Capital Budgeting And Cash Flow Analysis

Section: Chapter Questions

Problem 12P

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