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A Machine Is Purchased by Making Payments of €15,000 at the Beginning

question 62

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A machine is purchased by making payments of €15,000 at the beginning of each of the next five years. The interest rate was 10%. The future value of an ordinary annuity of 1 for five periods at 10% is 6.10510. The present value of an ordinary annuity of 1 for five periods is 3.79079. What was the cost of the machine?


Definitions:

Price Elasticity

Price elasticity measures the responsiveness of demand or supply of a good to changes in its price.

Absolute Value

The non-negative value of a number without regard to its sign.

Demand Function

A mathematical equation that specifies the quantity of a good or service demanded at various price levels, holding all other factors constant.

Price Elasticity

An economic metric indicating the responsiveness of the demand for a product or service to variations in its price.

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