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A maker of micromechanical systems can reduce product recalls by 10% with the installation of new packaging equipment. If the cost of the new equipment is expected to be $50,000, 7 years from now, how much could the company afford to spend now (instead of 7 years from now) at a minimum attractive rate of return of 12% per year? The sum of money the company could afford to spend now is S

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Answer #1
Expected cost after 7 year = 50000
Number of year 7
rate = 12%
Money can spend today = 50000/(1+.12)^7 22617.46
Therefore answer = 22617.46
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