Find the present value of an investment in plant and equipment if it is expected to provide annual earnings of $21,000 for 15 years and to have a resale value of $40,000 at the end of that period. Assume a 10% rate and earnings at year end. The present value of 1 at 10% for 15 periods is .23939. The present value of an ordinary annuity at 10% for 15 periods is 7.60608. The future value of 1 at 10% for 15 periods is 4.17725.
A) $159,728
B) $169,303
C) $185,276
D) $324,576

Question

Quizplus · Accepted Answer

($21,000 × 7.60608) + ($40,000 × .23939) = $169,303

Find the Present Value of an Investment in Plant and Equipment