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use generic table values Exercise 10-4B Determining the present value of an annuity Doris Hunt is considering whether to install a drink machine at the
use generic table values
Exercise 10-4B Determining the present value of an annuity Doris Hunt is considering whether to install a drink machine at the gas station she owns. Doris is con- vinced that providing a drink machine at the station would increase customer convenience. However, she is not convinced that buying the machine would be a profitable investment. Friends who have in- stalled drink machines at their stations have estimated that she could expect to receive net cash inflows of approximately $10,000 per year from the machine. Doris believes that she should earn 8 percent on her investments. The drink machine is expected to have a two-year life and zero salvage value. Required Round your computations to two decimal points. a. Use Present Value Appendix Table 1 to determine the maximum amount of cash Doris should be willing to pay for a drink machine. willing to pay for a drink machine. Requirement b. b. Use Present Value Appendix Table 2 to determine the maximum amount of cash Doris should be c. Explain the consistency or lack of consistency in the answers to Requirement a versusStep by Step Solution
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