A small manufacturing company needs to purchase a machine that will have a first cost of $70,000.
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A small manufacturing company needs to purchase a machine that will have a first cost of $70,000. The company wants to buy an option that will allow it to purchase the machine for the same price of $70,000 for up to 1 year from now. If the company's MARR is 10% per year, the maximum amount the company should pay for the option is closest to:
(a) $5850
(b) $6365
(c) $6845
(d) $7295
Minimum Acceptable Rate of Return (MARR), or hurdle rate is the minimum rate of return on a project a manager or company is willing to accept before starting a project, given its risk and the opportunity cost of forgoing other...
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