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%?

Answer rating: 100% (QA)

To calculate the present value of the returns and the cost of the pizza making machine at different ... View the full answer