Marilyn?s parents have agreed to help her purchase a new car upon graduation in four years. They have given her two choices. The first choice is that they will give her $3,680 each year for the next four years for her to invest herself. The second choice is that they will wait four years and give her $16,510. Marilyn can invest the money at a 3% rate. |
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| (b) If Marilyn can invest the money at 8%, which options should she choose? (Round present value factor calculations to 4 decimal places, e.g. 1.2512 and final answers to 0 decimal places e.g. 58,971.) Option 1 | Option 2 | Present value | $ | $ |
Marilyn should take option 1 option 2 . |
Attempts: 0 of 1 used | | SAVE FO |
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Birch manufacturing is considering the addition of another product line to its offerings. Equipment needed to produce the new line will cost $210,960. Birch estimates that the net cash inflows from the new product line will be as follows: Years 1-10 Years 11-15 Year 16-20 $19,200 (each year) $4,740 (each year) $2,040 (a) SHOW ANSWER Attempts: 1 of 1 used (b) If the company can establish a steady customer base before production starts and the cash inflows will be $14,530 per year for years 1 - 15, what will be the payback period? (Round answer to 2 decimal places, e.g. 1.64.) The payback period years