Advantage Milling Devices is preparing to buy a new machine for precision milling of special metal alloys. This device can earn $300 per hour, and can run 3,000 hours per year. The machine is expected to be this productive for four years. If the interest rate is 6%, what is the present value?
What is the present value if the interest rate is not 6%, but 9%?
Why does present value fall when interest rates rise?

Question

Advantage Milling Devices is preparing to buy a new machine for precision milling of special metal alloys. This device can earn $300 per hour, and can run 3,000 hours per year. The machine is expected to be this productive for four years. If the interest rate is 6%, what is the present value?
 What is the present value if the interest rate is not 6%, but 9%?
 Why does present value fall when interest rates rise?

Quizplus · Accepted Answer

The Answer of Advantage Milling Devices is preparing to buy a new machine for precision milling of special metal alloys. This device can earn $300 per hour, and can run 3,000 hours per year. The machine is expected to be this productive for four years. If the interest rate is 6%, what is the present value?
 What is the present value if the interest rate is not 6%, but 9%?
 Why does present value fall when interest rates rise?

Advantage Milling Devices Is Preparing to Buy a New Machine