help in homework

New User?

Fill This Form To Receive Instant Help

Help in Homework
trustpilot ratings
google ratings


Homework answers / question archive / Find the present value of an investment in plant and equipment if it is expected to provide annual earnings of $61500 for 15 years and to have a resale value of $121500 at the end of that period

Find the present value of an investment in plant and equipment if it is expected to provide annual earnings of $61500 for 15 years and to have a resale value of $121500 at the end of that period

Accounting

Find the present value of an investment in plant and equipment if it is expected to provide annual earnings of $61500 for 15 years and to have a resale value of $121500 at the end of that period. Assume a 12% rate and earnings at year end. The present value of 1 at 12% for 15 periods is 0.18270. The present value of an ordinary annuity at 12% for 15 periods is 6.81086. The future value of 1 at 12% for 15 periods is 5.47357.

 

1) $845360

2) $418868

3) $521045

4) $441066

pur-new-sol

Purchase A New Answer

Custom new solution created by our subject matter experts

GET A QUOTE

Answer Preview

Computation of the present value of ordinary annuity:-

PV of ordinary annuity = Present value of annual earnings + Present value of resale value

= ($61,500*((1-1/(1+12%)^15)/12%)) + ($121,500*(1/(1+12%)^15))

= ($61,500*6.81086) + ($121,500*0.18270)

= $418,867.89 + $22,198.05

= $441,065.94 Or $441,066

Hence, the correct option is 4)  $441,066

Sitejabber (5.0)

BBC (5.0)

Trustpilot (4.9)

Google (5.0)