Contemporary Financial Management, Loose-leaf Version
Contemporary Financial Management, Loose-leaf Version
14th Edition
ISBN: 9781337090636
Author: R. Charles Moyer, James R. McGuigan, Ramesh P. Rao
Publisher: South-Western College Pub
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Chapter 5, Problem 40P
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To determine: Amount saved by person T over the next 10 years.

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A new project will cost $40,000 to fund today, and an additional $40,000 next year.  The device built will generate revenues of $17,000 starting in year 2 which increases by 4% each year until the device is sold at the end of year 12.  The device’s salvage value is $10,000.  $2,000 of maintenance is required every year.  What is the NPV of building this device, if the interest to borrow the funds is 15%?  (Round to nearest dollar)
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