Calculate the cost to buy the equipment from each maker

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Question - J&J, a mask manufacturer, needs to purchase some automated equipment. Two equipment makers, Appleton and Bertrant offer to sell them the equipment.

Appleton sells the equipment for $600,000 and must be paid immediately. At the end of 5 years, Appleton will buy back the used equipment for $80,000.

Bertrant will sell the equipment for $600,000 and allows J&J to make the $600,000 payment six months from today.

Bertrant will buy back the used equipment at the end of 5 years for $50,000.

Calculate the cost to buy the equipment from each maker, in today's money, if money is valued at 10% compounded semi-annually.

Reference no: EM132894032

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