What is the value of the device

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Reference no: EM131994991

1. You own a manufacturing business and are considering the purchase of a labor-saving device. You project that the device will last 9 years and save you $1,000 per month in labor costs (assume that the savings are realized at the end of each month). At the end of 9 years, you project you can sell the device for a salvage value of $11,000. Assuming that you can earn 10.5% compounded monthly on your money, what is the value of the device?

a $10,124.82

b $69,682.23

c $9,523.38

d $73,975.31

2. A corporation issues 24-year $1,000 zero-coupon bonds. If you buy one of these bonds you will receive no interest checks during the 24 years, but will receive the $1,000 maturity value in 24 years. Based on a prevailing 9% annual rate, what price must you pay for one of these bonds?

a $794.69

b $334.02

c $144.28

d $126.40

Reference no: EM131994991

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