Harrison Co. has additional funds that need to be invested, and is considering purchasing an asset that is expected to return $30,000 per year after tax for the next 5 years, with an after-tax disposal value of $30,000. Merrill Co.'s required rate of return is 10%.
What is the maximum amount that Harrison Co. would be willing to pay to purchase this asset? (Use the appropriate discount factor from Appendix A.)

Question

Harrison Co. has additional funds that need to be invested, and is considering purchasing an asset that is expected to return $30,000 per year after tax for the next 5 years, with an after-tax disposal value of $30,000. Merrill Co.'s required rate of return is 10%. 
What is the maximum amount that Harrison Co. would be willing to pay to purchase this asset? (Use the appropriate discount factor from Appendix A.)

Quizplus · Accepted Answer

The Answer of Harrison Co. has additional funds that need to be invested, and is considering purchasing an asset that is expected to return $30,000 per year after tax for the next 5 years, with an after-tax disposal value of $30,000. Merrill Co.'s required rate of return is 10%. 
What is the maximum amount that Harrison Co. would be willing to pay to purchase this asset? (Use the appropriate discount factor from Appendix A.)