Chapter 7: Net Present Value and Capital Budgeting

The present value of purchasing the 11 AEH word processors now is: PV(Purchase) = -$5,000 * 11 = -$55,000. The present value of the maintenance costs is found by applying the three-year annuity formula, discounted at 14 percent. PV(Maintenance Costs) = (-$2,500*11) A30.14 = … ................
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