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3) Terry is considering purchasing a used tractor and restoring it. He estimates that his total restoration cost including his labor, in today's dollars, will
3) Terry is considering purchasing a used tractor and restoring it. He estimates that his total restoration cost including his labor, in today's dollars, will be $21,400. He also estimates that he can resell the tractor 1 year from now at a price of $24,000. Should Terry undertake this project if he requires a 9.5 percent rate of return? Why or why not? A) Yes; because the price of $24,000 provides a return in excess of 9.5 percent. B) Yes; because the selling price is greater than the cost. C) No; because the present value of the sales price is less than $21,400. D) No; because the net present value is -$102.16. E) No; because the net present value is $517.81
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