Chris Anderson has just purchased some equipment for his landscaping business. For this equipment he must...
Chris Anderson has just purchased some equipment for his landscaping business. For this equipment he must pay the following amounts at the end of each of the next five years: $10,920, $7,690, $9,450, $12,850, and $11,080. If the appropriate discount rate is 7.035 percent, what is the cost in today’s dollars of the equipment Chris purchased today?
Homework Answers
Cost in todays dollars = CF1/(1+r)^1 + CF2/(1+r)^2 …………CFn/(1+r)^n
= 10920/ 1.07035^1+ 7690/ 1.07035^2 + 9450/ 1.07035^3 + 12850/ 1.07035^4 + 11080/ 1.07035^5
=
| 42298.44 |
The cost in today’s dollars of the equipment Chris purchased today is $42298.44
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