Chrome File Edit View History Bookmarks People Window Help , Unit 12-Time Value

Question

Chrome File Edit View History Bookmarks People Window Help , Unit 12-Time Value of Money × Take Test: TVM practice probl V 47 Bra Secure https://blackboard.ecu.edu/webapps assessment/take/launch.jsp?. QUESTION 1 Machine 1 - Saves nothing in year 1 -Save you $2,000 in year 2 - Saves $1,000 in year 3 What is the PV of the savings for machine 1? QUESTION 2 Machine 2: - Saves nothing in year 1 - Save you $1,000 in year 2 -Saves $2,000 in year 3 What is the PV of the savings for machine 2? QUESTION 3 Based on the PV of the savings for each machine, which would you buy? O 1 Machine 1 2. Machine 2 Click Save and Submit to save and submit. Click Save All Answers to save all answers.

Explanation / Answer

let the discount rate be 10%

PV of machine 1 = 2000/1.12 + 1000/1.13 = 2404.21

PV of machine 2 = 1000/1.12 + 2000/1.13 = 2329.08

buy machine 1

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