What is the present worth of the expected income

Assignment Help Business Economics

Reference no: EM13833953

Income from recycling plastics is expected to be $2000 in Year 1 and increase by $500 a year for each of the next 5 years if you buy a sorting machine. ($2000 in Year 1, $2500 in Year 2, etc.)

a) Draw a cash flow diagram showing your expected income in years 1, 2, 3, 4, 5, and 6 assuming you buy the new machine.

b) What is the present worth of the expected income over the 6-year period assuming you buy the machine and the interest rate = 10%?

c) If the new sorting machine has an expected life of 6 years and a salvage value of $1500, what is the most you would be willing to pay for the machine if i = 10%?

Reference no: EM13833953

Questions Cloud

Find the marginal profit : The profit in dollars from the sale of x expensive watches is Px=0.03x2?3x+2x0.3?5000. Find the marginal profit when (a) x=300, (b) x=2000, (c) x=5000, and (d) x=10,000.

Expenditures that do not vary with the level of real GDP : Expenditures that do not vary with the level of real GDP are called:

Firms in a monopolistically competitive market collude : Even if the firms in a monopolistically competitive market collude successfully and fix price, economic profit will still be competed away if there is unrestricted entry. Do you agree with this statement? Support your answer. Will price be higher or ..

What are the total current liabilities : If a company's accounts payable is $42,041, retained earnings are $412,474, long-term debt is $391,227 and your accrued expenses are $5,966, what are the total current liabilities?

What is the present worth of the expected income : Income from recycling plastics is expected to be $2000 in Year 1 and increase by $500 a year for each of the next 5 years if you buy a sorting machine. Draw a cash flow diagram showing your expected income in years 1, 2, 3, 4, 5, and 6 assuming you b..

Unbiased estimator of the error variance : This assignment will guide you through the derivations needed to determine what is a unbiased estimator of the error variance in the context of a univariate linear regression. This assignment may be quite challenging.

Demand decreases and supply increases then for sure : If both demand decreases and supply increases then for sure. Which of the following will decrease the demand for chicken?

Entice additional bidders to attend your auction : In the auction described above, suppose that you could entice additional bidders to attend your auction. However, none of the new bidders would have a valuation greater than $3.0 million.

Expected variable costs and expected costs from overbooking : Suppose the hotel in the lecture example raised its price from $30 to $30.50. With the new price, the hotel expects 96 guests to arrive 5% of the time, 97 guests 10% of the time, 98 guests 20% of the time, 99 guests 30% of the time, 100 guests 25% of..

User Account

All Pages