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James is considering a project which would cost $10,000 now. The annual benefits, for 4years,wouldbeafixedincomeof$3,500ayear,plusothersavingsof$500ayearinyear1, rising by 5% each year because of inflation. Running costs
- James is considering a project which would cost $10,000 now. The annual benefits, for 4years,wouldbeafixedincomeof$3,500ayear,plusothersavingsof$500ayearinyear1, rising by 5% each year because of inflation. Running costs will be $1,300 in the firstyear,butwouldincreaseat10%eachyearbecauseofinflatinglabourcosts.Thegeneralrate of inflation is expected to be 7% and the company's required money rate of returnis 16%. Isthe projectworthwhile? (Ignoretaxation.)
- You need $4,000 to buy a new baking oven for your business in 4 years. What value youmusthavenow ifthecompounded annuallyreturn is12%.
- Your parents placed $240,000 in a trust fund for you. In 15 years, what will be the worthofthe savings.Iftheestimated rate ofreturn onthe trustfund is 10%?
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College Accounting A Contemporary Approach
Authors: David Haddock, John Price, Michael Farina
5th Edition
126078035X, 978-1260780352
