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anonymous
 5 years ago
What is the present worth of a machine if its return is $3500 per year for eight years, if the effective annual interest rate is taken to be 8%.
My answer is: $20,113.....is this correct?
anonymous
 5 years ago
What is the present worth of a machine if its return is $3500 per year for eight years, if the effective annual interest rate is taken to be 8%. My answer is: $20,113.....is this correct?

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anonymous
 5 years ago
Best ResponseYou've already chosen the best response.0what did you do to get the answer?

anonymous
 5 years ago
Best ResponseYou've already chosen the best response.0p=3500(1+0.08)^8 my answer is: $6.478

anonymous
 5 years ago
Best ResponseYou've already chosen the best response.0return is not the principal amount. It is the profit on the principal amount at the rate of return. You are wrong, Nancy

anonymous
 5 years ago
Best ResponseYou've already chosen the best response.0if return use this; p=3500(10.08)^8

anonymous
 5 years ago
Best ResponseYou've already chosen the best response.0Well, first I found a factor that would convert the cash flow pattern from an annuity to present value. The factor I came up with is [((1+0.08)^(8))1]/[0.08(1+0.08)^(8)], which equals 5.747. Then I multiplied that factor by my intitial annuity. So, 5.747(3500)=$20,113.23
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