Derek has the opportunity to buy a money machine today. The money machine will pay Derek...

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Derek has the opportunity to buy a money machine today. The money machine will pay Derek...

Derek has the opportunity to buy a money machine today. The money machine will pay Derek $17,406.00 exactly 9.00 years from today. Assuming that Derek believes the appropriate discount rate is 12.00%, how much is he willing to pay for this money machine?

Answer Format: Currency: Round to: 2 decimal places.

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Answer 1

Answer #1

Present value=17406*present value of discounting factor (12%,9)

=17406/1.12^9

=17406*0.360610025

=$6276.78(approx).

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Answer 2

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