You are considering buying a new laser printer to use in your part-time desktop publishing business. The
Question:
You are considering buying a new laser printer to use in your part-time desktop publishing business. The printer will cost $380, and you are certain it will generate additional net revenue of $100 per year for each of the next five years. At the end of the fifth year, it will be worthless. Answer the following questions:
a. What is the value of the printer if you could lend funds safely at an annual interest rate of 10 percent? Is the purchase of the printer justified?
b. Would your answer to part (a) change if the interest rate were 8 percent? Is the purchase justified in that case? Explain.
c. Would your answer to part (a) change if the printer cost $350? Is the purchase justified in that case?
d. Would your answer to part (a) change if the printer could be sold for $500 at the end of the fifth year? Is the purchase justified in that case? Explain.
Step by Step Answer:
Macroeconomics Principles and Applications
ISBN: 978-1133265238
5th edition
Authors: Robert e. hall, marc Lieberman