Number of months = 3 x 12 = 36
PV of future cost = $1,700,000 x P/F(1.5%, 36) = $1,700,000 x (1.015)-36 = $1,700,000 x 0.5851
= $994,670
14. Steel is investigating whether it should replace some of its basic oxygen fumace equipment now...
1) Emeco Holdings Limited (Emeco) is a company listed on the Australian Securities Exchange (ASX). Emeco is investigating a proposal to replace one of their outdated earth-moving excavators with a new CAT 390F excavator. The new excavator has a much larger carrying capacity, offers improved fuel economy and has lower maintenance costs compared to the existing excavator. However, the cost of a brand new CAT 390F is $2.8 million and Emeco’s accountant is concerned that the net profit of the...
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