A New Machine Tool Is Expected to Generate Receipts as Follows

question 69

Essay

A new machine tool is expected to generate receipts as follows: $5,000 in year one; $3,000 in year two, nothing in the next year, and $2,000 in the fourth year. At an interest rate of 6%, what is the present value of these receipts?
Is this a better present value than $2,500 each year over four years?
Explain.

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Definitions:

Nasal Cannula

A device used to deliver supplemental oxygen or airflow to a patient in need of respiratory help, consisting of a lightweight tube which on one end splits into two prongs that are placed in the nostrils and from which a mixture of air and oxygen flows.

Productive Cough

A cough that expels mucus or phlegm from the respiratory tract, indicating the clearing of airways.

Ventilator-Associated Pneumonia

A type of lung infection that occurs in people who are on mechanical ventilation breathing machines in hospitals, posing significant risks.

Mechanical Ventilation

An approach to aid or supplant self-initiated breathing through the use of a device referred to as a ventilator.