Question
If the five year total of net income is 5650, what is the total rent revenue earned given the following scenario: two friends contributed 7,000
If the five year total of net income is 5650, what is the total rent revenue earned given the following scenario: two friends contributed 7,000 each to form a new business. The owners used a the amounts contributed to purchase a machine for 7,000 cash. They estimated the useful life of the machine was four years and the salvage value was 2,000. They rented out the machine to a customer for four years. Annual cash operating costs for insurance, taxes, and other items totaled 850 annually. At the end of the fourth year, the owners sold the equipment for 3150 instead of 2,000 salvage value initially estimated. (Hint: compute the total net income and total cash flows other than cash flows with owners for the five year period as a whole.)
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