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melisa1 [442]
3 years ago
11

Your firm spends $ 5 comma 200 every month on printing and mailing​ costs, sending statements to customers. If the interest rate

is  0.46 % per​ month, what is the present value of eliminating this cost by sending the statements​ electronically?
Business
1 answer:
Korvikt [17]3 years ago
7 0

Answer:

The present value for eliminating this cost will be of $1,130,434.78

Explanation:

we solve for the present value of a perpetual annuity as this cost goes forever unless we change into electronically afterwich; they disappear entirely.

\frac{C}{r} =PV

\frac{5,200}{0.46} = 1,130,434.78

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