Question

A company that manufactures air-operated drain valve assemblies currently has $120,000 available to pay for plastic component

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Answer #1

Solution:-

The required amount that the company can spend is given by

120,000 = 56,000(P/F, 9%, 1) + A*((P/A, 9%, 5) - (P/A, 9%, 1))

120,000 = 56,000*0.9174 + A*(3.890-0.917)

120,000 = 51,374.4 + A * 2.973

A = (120,000 – 51,374.4) / 2.973

A = $68,625.6 / 2.973

A = $23,082.95 or $23,083

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