Annual cost of ownership of this machine over useful life

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1. A production machine costs $40,000 and has a 7-year useful life. At the end of 7 years, it can be sold for $10,000. If interest is 10% compounded quarterly, what is the equivalent annual cost of ownership of this machine over its useful life?

2. Mel plans to save 12,700 dollars per year for 5 years. His first savings contribution is expected in 1 year. He then plans to withdraw 19,400 dollars per year for as long as he can. Mel expects to earn 3.16 percent per year. How many payments of 19,400 dollars can Mel expect to receive if his first annual payment of 19,400 dollars is received in 5 years?

Reference no: EM131978755

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