Present Value and Break-Even Interest Consider a firm with a contract to sell an asset...
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Accounting
Present Value and Break-Even Interest
Consider a firm with a contract to sell an asset for $135,000 three years from now. The asset costs $89,000 to produce today. Given a relevant discount rate on this asset of 13 percent per year, will the firm make a profit on this asset? At what rate does the firm just break even, i.e., at what discount rate profits are zero? Revenue in Three Years $135,000.00 Cost of Asset Now $89,000.00 Discount Rate 13.0% Profits (if any) Break Even Rate.
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