What is the total PV of the 8 monthly payments of $13500 per month. You should assume that the payments are made at the end months 1 through 8. (So this is a ordinary simple

Principles of Accounting Volume 2
19th Edition
ISBN:9781947172609
Author:OpenStax
Publisher:OpenStax
Chapter11: Capital Budgeting Decisions
Section: Chapter Questions
Problem 17EB: Caduceus Company is considering the purchase of a new piece of factory equipment that will cost...
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You are investigating the cost of project to
renovate the kitchens in a large apartment
building, the payments for this work will be
$32,500 up front and $13500 a month for 8
months, followed by a completion payment of
$31500. To start this project you will need to
purchase equipment for $70,000 at the
beginning of the project and you expect
monthly materials and operating costs to be
about $7,500.
The Rate of Return is 12%.
What is the total PV of the 8 monthly payments
of $13500 per month. You should assume that
the payments are made at the end months 1
through 8. (So this is a ordinary simple
annuity).
Round your answer to the nearest penny.
Your Answer:
Answer
Transcribed Image Text:You are investigating the cost of project to renovate the kitchens in a large apartment building, the payments for this work will be $32,500 up front and $13500 a month for 8 months, followed by a completion payment of $31500. To start this project you will need to purchase equipment for $70,000 at the beginning of the project and you expect monthly materials and operating costs to be about $7,500. The Rate of Return is 12%. What is the total PV of the 8 monthly payments of $13500 per month. You should assume that the payments are made at the end months 1 through 8. (So this is a ordinary simple annuity). Round your answer to the nearest penny. Your Answer: Answer
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ISBN:
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