A company purchases a piece of equipment for $15,000. After nine years, the salvage value...
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Accounting
A company purchases a piece of equipment for $15,000. After nine years, the salvage value is $900. The annual insurance cost is 5% of the purchase price, the electricity cost is $600/yr, and the maintenance and replacement parts cost is $120/yr. The nominal annual interest rate is 9.6%, compounded monthly. Neglecting taxes, what is most nearly the present worth of the equipment if it is expected to earn the company $4500 per year?
- $2300
- $2800
- $3200
- $3500
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