A 24- Hour Music Network Plans to Add Satellite Technology

question 9

Short Answer

A 24- hour music network plans to add satellite technology to allow its expansion into other major southern markets. The network expects the monthly revenue to increase by
$380,000 from new cable subscription fees. The satellite will require an initial cost of $2 million with monthly operating and maintenance costs of $340,000. It will have a $122,000 salvage value after 6 years. Calculate the net present worth of this investment at an interest rate of 4% per year, compounded continuously.

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Definitions:

Repurchase Prices

The cost at which a company can buy back shares or securities from the market or shareholders.

Market Prices

The current the current price at which an asset or service can be bought or sold in a particular market.

Dividends

Money given by a business to its stock owners, which comes from the profits the company has made.

Dividend Payments

Payments made by a corporation to its shareholders, usually derived from the company's profits.