What is the present worth of the contract

Reference no: EM131004254

1. A maker of microelectromechanical systems can reduce product recalls by 10% if it purchases new packaging equipment. If the cost of the new equip- ment is expected to be $40,000 four years from now, how much could the company afford to spend now (instead of 4 years from now) if it uses a minimum attractive rate of return of 12% per year?

2. How much money could Tesla-Sino Inc., a maker of superconducting magnetic energy storage systems, afford to spend now on new equipment in lieu of spending $85,000 five years from now, if the company's rate of return is 18% per year?

3. French car maker Renault signed a $95 million contract with ABB of Zurich, Switzerland, for automated underbody assembly lines, body assem- bly workshops, and line control systems. If ABB will be paid in 3 years (when the systems are ready), what is the present worth of the contract at 12% per year interest?

Reference no: EM131004254

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