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Your firm’s discount rate is 10 percent. You are considering the purchase of Truck A or Truck B. Truck A costs $100, has a useful life of 3 years, no salvage value and maintenance costs of $10 per year. Truck B costs $80, has a useful life of 2 years, no salvage value and maintenance costs of $15 per year. Which truck should you select and why?
Truck A because the EAC of -50.2 is less than Truck B’s EAC of -61.1
Truck A because the NPV of 125 if larger than B’s NPV of 106
Truck B because the EAC of 61.1 is greater than Truck A’s EAC of 50.2
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Assume that you are considering the purchase of a 30-year, noncallable bond with a coupon rate of 4%. The bond has a face value of $1,000, and it makes semiannual interest payments. If you require a 5% yield to maturity on this investment, what is th..
Bright star bank pays a nominal annual interest rate of 11.36 percent compounded quarterly on your savings account. Calculate the effective annual rate or EAR (answer plus units) round 2 decimal places
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You want to have $72,000 in your savings account 13 years from now, and you’re prepared to make equal annual deposits into the account at the end of each year. If the account pays 7.30 percent interest, what amount must you deposit each year?
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