# You are in the pizza business and want to buy a new pizza making machine. The machine costs $ 15051

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## Question:

You are in the pizza business and want to buy a new pizza making machine. The machine costs $ 15051 today. At the end of each year you own the machine it will give you returns of $3420 after paying for maintenance and repairs.

After you have owned the machine for 6 years you expect to sell it for scrap for $1,000. (You scrap it at the same time you get the last $3420 return.) What is the present value of the RETURNS at

a) 3%?

b) 7%?

c) 11%?

What's the present value of the COST of the machine if the interest rate is:

a) 3%?

b) 7%?

c) 11%?

**Related Book For**

## Financial Accounting and Reporting a Global Perspective

ISBN: 978-1408076866

4th edition

Authors: Michel Lebas, Herve Stolowy, Yuan Ding

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