The city of Pawnee wants to invest in new maintenance equipment for the Parks & Rec department. The cost of the equipment is $100,000 and will lead to $25,000 in savings annually for 15 years. If Pawnee is using payback period as their measure for the decision, should they invest if their required payback period is 5 years and the appropriate discount rate is 15%?

Andy is trying to start a shoe shine stand and is looking for investors. If you invest in his shoe shine stand he promises that over the next five years he will reward you with the following cash flows: $33, $78, $146, $197, $205. What is the value of these future cash flows if the appropriate discount rate is 10%?

Your friend wants to borrow $500 from you and gives you three options for repayment. Assuming a discount rate of 7%, which of the following options should you choose? Why?

Option A: $625 lump sum paid 4 years from now

Option B: $550 lump sum paid 3 years from now

Option C: $60 a year for the next 10 years

Answer rating: 100% (QA)

PART 1 The city of Pawnee is considering a piece of maintenance equipment that costs 100000 The equipment will lead to 25000 in savings per year for 1... View the full answer