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1. A construction company is planning for expansion of its services. The company forecasts spending $75,000 now and $50,000 two years from now for new
1. A construction company is planning for expansion of its services. The company forecasts spending $75,000 now and $50,000 two years from now for new equipment. The company will receive income of $100,000 in year four and $150,000 in year five based on using this new equipment. The Company uses an 8% per year hurdle rate. a) What is the equivalent amount if they bought all the equipment now? b) What is the equivalent amount if the income if it was earned in time zero? c) What is the total net amount now (time zero equivalent for income less costs)
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