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You need to purchase equipment for your automotive shop. Acme will sell you the equipment for $55,000. In 5 years, Acme will buy back the
You need to purchase equipment for your automotive shop. Acme will sell you the equipment for $55,000. In 5 years, Acme will buy back the used equipment for $30,250 if it is in good shape. Part 1 Calculate the cost to buy the equipment from Acme (in today's money) if money is valued at 10% effective (j1 = 10%). Assume the equipment is returned in good shape. (4 marks) Round to 2 decimal places (add a $ sign) Part 2 Beta will sell you the equipment for the same price ($55,000) but offers to pay you more for the used equipment in 5 years. Beta wants to beat Acme's cost by $2,000 (in today's money). How much must Beta pay for the used equipment in 5 years if money is still valued at 10% effective? (4 marks)
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