What is the present value of these receipts

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Reference no: EM132029860

A new machine tool is expected to generate receipts as follows: $5,000 in year one; $3,000 in the year two, nothing in the third year, and $1,500 in the fourth and fifth year. At an interest rate of 10%,

a) What is the present value of these receipts?

b) Is this a better present value than $2,600 each year over five years? Explain.

Reference no: EM132029860

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