What is the maximum price he should pay for the equipment

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Reference no: EM131091447

Rental equipment is for sale for $110,000. A prospective buyer estimates he would keep the equipment for 12 years and spend $6000 a year on maintaining the equipment. Estimated annual net receipts from equipment rentals would be $14,400. It is estimated rental equipment could be sold for $80,000 at the end of 12 years. If the buyer wants a 7% rate of return on his investment, what is the maximum price he should pay for the equipment?

Reference no: EM131091447

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