Advantage Milling Devices Is Preparing to Buy a New Machine

question 78

Essay

Advantage Milling Devices is preparing to buy a new machine for precision milling of special metal alloys. This device can earn $300 per hour, and can run 3,000 hours per year. The machine is expected to be this productive for four years. If the interest rate is 6%, what is the present value?
What is the present value if the interest rate is not 6%, but 9%?
Why does present value fall when interest rates rise?

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Definitions:

Transfer Warranty

A legal guarantee assumed by a person who transfers a negotiable instrument, asserting that certain conditions about the instrument are met.

Authentic

Genuine or verified to be original and not a copy or fake.

Negotiable Instrument

A voucher confirming the remittance of a specified financial amount, payable either immediately upon demand or on a scheduled date, with the payer's details included on the document.

Alters

In legal or general context, to change or modify something, such as a document, condition, or situation.