Suppose a Machine Generates $500 Worth of Revenue at the End

question 30

Multiple Choice

Suppose a machine generates $500 worth of revenue at the end of each of the next three years, at which time it can be sold to a salvage company for $350. If the annual rate of interest is 0.08, what is the maximum amount a business would pay for this machine if maintenance costs are $100 per year?

• A)$1506
• B)$1309
• C)$9567
• D)$1096

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