**Bonus calculation Questions (5 Marks)**

Calculate the Present value of the investmentin a machine with a 5 year life-span. It will generate profit in the following way: $1000 at the end of year 1, $1500 at the end of year 2, $2600 and the end of the 3rd year, $3000 at the end of the 4th year and finally has a salvage value of $1,000 at the end of the 5th year. Assume a discount rate of 13%.

If the investor requires a 10% rate of return at what price would it be appropriate to purchase this asset?

Any price above $6,233

b.

At any Price below $5,609

c.

At a price Equal to $6,233

d.

Any price below $6,233