Solution-What is the present value of the costs of owning

What is the present value of the costs of owning

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Question (a) A five-year, $50,000 loan is secured at a nominal rate of 4% per year, compounded quarterly. If immediately after making your second quarterly payment you decide to pay off the loan, what would be the balance amount?

Question (b) An industrial robot is purchased and installed for $85,000. Annual operating and maintenance costs are expected to be $1,500, with software upgrades increasing by $500 per year from $5,000 in year 1. If the robot has an eight-year life, what is the present value of the costs of owning it? Assume that the robot has no salvage value. Assuming the annual interest rate is 10%.

Question (c) A farmer purchases a new combine harvester for $200,000 with an expected lifetime of 15 years and a salvage value of $15,000 at that time. If the operating and maintenance costs are $3,500 per year over the expected life, and the interest rate is 6% per year. What is the annual equivalent costs for ownership of the equipment?

Reference no: EM132549427

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What is the present value of the costs of owning : If the robot has an eight-year life, what is the present value of the costs of owning it? Assume that the robot has no salvage value.

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What is the present value of the costs of owning

Reference no: EM132549427

Reference no: EM132549427

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