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:

Total U.S. Workforce

The complete count of all employed individuals within the United States, including both private and public sectors.

Total Revenue

The complete sum of financial income generated by an entity from its various activities, including sales, donations, services, and investments.

Charitable Nonprofits

Organizations that are established for philanthropic purposes and are exempt from federal income tax under section 501(c)(3) of the IRS code.

Tax-Exempt

The status granted to organizations that exempts them from paying certain taxes due to their charitable, educational, or religious nature.