Question
Machine cost = $15,000; life = 8 years; salvage value = $3,000. What minimum cash return would an investor demand annually from the operation of
Machine cost = $15,000; life = 8 years; salvage value = $3,000. What minimum cash return would an investor demand annually from the operation of this machine if he desires interest annually at the rate of 8% on his investment and accumulates a capital replacement fund by investing annual deposits at 5%?
Answer : $ 2456.66
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Step: 1
To determine the minimum annual cash return an investor would demand from the operation of a machine we need to consider two main factors Annual return required on the investment interest Annual depos...
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Financial Markets and Institutions
Authors: Anthony Saunders, Marcia Cornett
6th edition
9780077641849, 77861663, 77641841, 978-0077861667
