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7. ERVBingham No timeline required Sam's Lumber Company wants to purchase a tract of land that is expected to return $42,000 over operating costs each
7. ERVBingham No timeline required Sam's Lumber Company wants to purchase a tract of land that is expected to return $42,000 over operating costs each year for the next five years. At the end of five years, the company sell land to an environmental group for $20,000. If the company wants a return of 8.5% per year on its investment and can set up a sinking fund at 5% interest compounded annually to recover capital cost, the equation which can be used to find the purchase price is which of the following? (you do not need to solve it) a. $42,000 = 0.085C + (C-$20,000). b. $42,000 = 0.085C + (C-$20,000).. c. $42,000 = 0.085C + (C+$20,000). 0.05 1.055-1 0.05 1-1.05-5 d. $42,000 = 0.085C + (C+$20,000). 0.05 1.055-1 0.05 1-1.05-5 bute
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