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

Question

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] · Answer 1 · 2022-08-28T18:15:51+03:00

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.

$\frac{C}{r} =PV$

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

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

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