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Interest rates and sales




Mideque, Inc. is considering a project to produce pens. It is estimated that the initial cost of the equipment etc will be $24,000. Reves sales over the 5 year life of project will be $15,000 Yearly Expenses $7000. They will finance $9000 by load - interest rate 15% the loan will be repaid at a rate of $2000 per year + int on the remanding balance each year. Straight line depreciation and the loan equipment will have no salvage value at the end of its life assume corporate profit rates 50%. Replacement project. The old equipment can be sold for 10,000 and was bought 5 years ago for $22,000 and was assumed to last 10 years;A. Initial investment;B. Annual cash flow last period;C. Annual cash flow first 4 periods


Paper#18207 | Written in 18-Jul-2015

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