A machine costing $2000 to buy and $300 per year to operate will save labor expenses of
Question:
A machine costing $2000 to buy and $300 per year to operate will save labor expenses of $650 per year for eight years. The machine will be purchased if its salvage value at the end of eight years is sufficiently large to make the investment economically attractive. If an interest rate of 10% is used, estimate the minimum salvage value.
2. Company A offers Company B $2.5 million to purchase the rights to a patent. If the patent can bring in $500,000 in royalties each year over the next six years, should Company B take the offer? Assume an interest rate of 6% per year.
a) Not enough information is provided
b) No, the offer must be at least $3.0 million
c) No, the offer must be at least $4.0 million
d) Yes
3. If $2000 is deposited three years from today in an account paying 8% interest, how much will be able to be withdrawn at the end of ten years?
Expert Answer:
Step 1 Calculate annual net savings Net savings Labor savings Operating cost 650 300 350 per year St... View the full answer
