Determine the nominal price of the machine

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Reference no: EM131810433

The Widget Company will need a certain type of milling machine for its new assembly line. The machine presently costs $85,000. It has had a differential inflation rate of 2%. Widget will not need to purchase the machine for 2 years. If inflation is expected to be 4% per year during those 2 years, determine the nominal price of the machine. What is the PW of the machinery if the market rate of interest for Widget is 9%.

Reference no: EM131810433

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