What is the amount foley should invest

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Reference no: EM132492240

Question (a) What is the present value of $25,200 due 10 periods from now, discounted at 6%? (Round answer to 2 decimal places, e.g. 25.25.)

Question (b) What is the present value of $25,200 to be received at the end of each of 11 periods, discounted at 8%? (Round answer to 2 decimal places, e.g. 25.25.)

Lincoln Company is considering an investment that will return a lump sum of $732,400, 4 years from now.

Question 1: What amount should Lincoln Company pay for this investment to earn an 6% return? (Round answer to 2 decimal places, e.g. 25.25.)

Foley Company earns 8% on an investment that will return $513,400, 11 years from now.

Question 2: What is the amount Foley should invest now to earn this rate of return? (Round answer to 2 decimal places, e.g. 25.25.)

Nick Heller owns a garage and is contemplating purchasing a tire retreading machine for $26,000. After estimating costs and revenues, Nick projects a net cash flow from the retreading machine of $3,600 annually for 11 years. Nick hopes to earn a return of 8% on such investments.

Question 3: What is the present value of the retreading operation? (Round answer to 2 decimal places, e.g. 25.25.)

Question 4: Should Nick purchase the retreading machine?

Reference no: EM132492240

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