Answer:
$34,816.60
Step-by-step explanation:
The computation of the maximum amount of cash should willing to pay for the copy machine by using the present value is shown below:
Present value is
where,
Incremental cash flows is $14,000 per year
Discount rate is 10%
And, the number of years is three years
PVIFA factor for 10% at 3 years is 2.4869
Refer to the PVIFA factor table
Now placing these values to the above formula
So, the present value is
= $34,816.60
very interesting
the equation we are given is for when the units of t are in years
I do know that you want to have the variable as time, but I'm not sure if you want it in years or months
I will solve for in months because that makes more sense
in that case, it will be 2250(1+r)^m where r=monthly interest rate and m=time in months
to compare, we can do
when 1 year has elapsed, t=1 and m=12
and the amount earned should be the same
so therfor we can say
divide both sides by 2250 to make it easier
take 12th root of both sides
minus 1 both sides
using a calculator
-1+1.01316961=r
<span>0.01316961=r</span>
<span>not sure if yu want percent to thousandth or decimal to thousandth</span>
<span>if decimal then 0.013 is interest rate</span>
<span>if percent then it is 1.317% interest rate</span>