A company plans to modernize its facilities in 8 years. They estimate saving $3,281 per month...

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A company plans to modernize its facilities in 8 years. They estimate saving $3,281 per month if they sell some of their machines now, and salvage them for $19,664. They also think 4 years from now their current $1,350 per month O & M costs will increase by 0.29 per month until they sell the rest of the machines to modernize. How much capital will they have available to modernize if they place all the savings into an account that pays them a nominal 15.42% rate, compounded 7 periods per year? A company plans to modernize its facilities in 8 years. They estimate saving $3,281 per month if they sell some of their machines now, and salvage them for $19,664. They also think 4 years from now their current $1,350 per month O & M costs will increase by 0.29 per month until they sell the rest of the machines to modernize. How much capital will they have available to modernize if they place all the savings into an account that pays them a nominal 15.42% rate, compounded 7 periods per year?

Answer rating: 100% (QA)

To calculate the capital available to modernize we need to determine the future value of the savings ... View the full answer