The answer would be C.
savings accounts typically have lower earning potentials than investments do.
Answer:
$714,980.95
Explanation:
The most it would be willing to pay is the present value of the cash flows
present value is the sum of discounted cash flows from a project
present value can be determined with a financial calculator
Cash flow each year from year 1 to 6 = $150,000
I = 7%
Present value = $714,980.95
To find the PV using a financial calculator:
1. Input the cash flow values by pressing the CF button. After inputting the value, press enter and the arrow facing a downward direction.
2. after inputting all the cash flows, press the NPV button, input the value for I, press enter and the arrow facing a downward direction.
3. Press compute
Answer:
Depreciable cost per mile= $0.37
Explanation:
Giving the following information:
Purchase price= $38,800
Salvage value= $1,800
Expected to be driven 100,000 miles over its estimated useful life.
<u>To calculate the depreciable cost per mile, we need to use the following formula:</u>
Depreciable cost per mile= (original cost - salvage value)/useful life of production in miles
Depreciable cost per mile= (38,800 - 1,800)/100,000
Depreciable cost per mile= $0.37
50,000×5=250,000
250,000÷4=625,000
250,000-625.000=375.00
Sum=375.00
Answer:
$4,038
Explanation:
Present value (PV) is the current value of a future sum of money or stream of cash flows given a specified rate of return. Future cash flows are discounted at the discount rate, and the higher the discount rate, the lower the present value of the future cash flows.
Present Value = Future Value x (1/ ( 1 + interest rate ) ^ number of periods)
Present Value = 6,000 x (1/ ( 1 + 0.08) ^ 5)
Present Value = 6,000 x 0.68058
Present Value = $4,038