BioPharm Inc. recently acquired Cow Biopharmaceuticals Inc., a producer of antibodies and Cow- HB to prevent Hepatitis B re- infection in liver transplant patients. The company plans to invest $3.5 million in new manufacturing equipment. The Cow Biologics division is expected to generate revenue of $300,000 and operating cost of $330,000 each month.
The new equipment is estimated to have a $700,000 salvage value after 7 years. What is the future worth of this investment if the company's minimum attractive rate of return is 18% per year, compounded monthly.

Question

Quizplus · Accepted Answer

The Answer of BioPharm Inc. recently acquired Cow Biopharmaceuticals Inc., a producer of antibodies and Cow- HB to prevent Hepatitis B re- infection in liver transplant patients. The company plans to invest $3.5 million in new manufacturing equipment. The Cow Biologics division is expected to generate revenue of $300,000 and operating cost of $330,000 each month.
The new equipment is estimated to have a $700,000 salvage value after 7 years. What is the future worth of this investment if the company's minimum attractive rate of return is 18% per year, compounded monthly.