Question
A start-up internet service provider excepts to lose money in each of the first four years. Loses are projected to be $50 million in year
A start-up internet service provider excepts to lose money in each of the first four years. Loses are projected to be $50 million in year one, $40 million in year two, $30 million in year three and $5 million in year four. An interest rate of 10% per year is used.
1. What is the present worth of the losses for the first three years?
2. What is the present worth of the losses for all four years?
3. What is the equivalent uniform annual worth of the losses through year four?
4. In order to recover the losses by the end of year nine, the company equivalent uniform annual profit in years in years five through nine must be?
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