Cory is considering buying a new, fully insulated and enclosed deer stand at a cost of $1,000. He wont have a salvage value in the future but will cost him $100 to dispose of when he is done using it. He considers the advantages of owning and hunting from the deer stand will be $250 per year. Cory's interest rate is 15%. How many years must Cory hunt from the deer stand in order for the purchase to be economically attractive?
Answer:
Based on information given:
PV = - $1000
PMT = $250
FV = -$100
Interest rate = 15%
Hence:
Number of years Cory must hunt = NPER (rate, pmt, pv, fv, type) = NPER (15%, 250, -1000, -100, 0) = 6.97 or 7 Years
Number of years Cory must hunt from the deer stand in order for the purchase to be economically attractive = 7 years
Cory is considering buying a new, fully insulated and enclosed deer stand at a cost of...