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stealth61 [152]
3 years ago
6

Timken roller bearing is a manufacturer of seamless tubes for drill bit collars. Company is planning to add larger capacity robo

tic arms to one of its assembly lines 3 years from now. If it is done now, the cost of the equipment is $2.4 million. Assume that the company's real MARR is 15% per year and the inflation rate is 2.8% per year. Determine the equivalent amount the company can spend 3 years from now in then-current dollars.
a. $4,943,200.
b. $2,943,200.
c. $3,943,200.
d. unknown.
Business
1 answer:
RoseWind [281]3 years ago
5 0

Answer:

the  equivalent amount the company can spend 3 years from now in then-current dollars is $3,943,200

Explanation:

The computation of the equivalent amount the company can spend 3 years from now in then-current dollars is shown below:

= $2,400,000 × (1 + 17.8%)^3

= $2,400,000 × 1.63942

= $3,943,200

Hence, the  equivalent amount the company can spend 3 years from now in then-current dollars is $3,943,200

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