You believe you have discovered a new medical device. You anticipate it will take additional time toget the device fully operational, run clinical trials, obtain FDA approval, and sell to a buyer for$520,000. Assume a discount rate of 6% compounded annually. What is the value today ofdiscovering the medical device, assuming you sell it for $520,000 in (a) two years, (b) three years, or(c) four years? (FV of $1. PV of $1. FVA of $1. and PVA of $1) (Use tables, Excel, or a financialcalculator. Round your answers to 2 decimal places.)a.b.C.PaymentAmount$ 520,000520,000520,000InterestRateCompounding Period Due6% Annually6%Annually6% Annually2 years3 years4 yearsPresentValue

The present value is calculated when an investor wants to know what is the value today or on the…

Answered: You believe you have discovered a new…

FINANCIAL ACCOUNTING

10th Edition

ISBN:9781259964947

Author:Libby

Publisher:Libby

Chapter1: Financial Statements And Business Decisions

Section: Chapter Questions

Problem 1Q

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You believe you have discovered a new medical device. You anticipate it will take additional time to get the device fully operational, run clinical trials, obtain FDA approval, and sell to a buyer for $240,000. Assume a discount rate of 6% compounded annually. What is the value today of discovering the medical device, assuming you sell it for $240,000 in (a) two years, (b) three years, or (c) four years? Note: Use tables, Excel, or a financial calculator. Round your answers to 2 decimal places. (FV of $1, PV of $1, FVA of $1, and PVA of $1) Help me please asap
You can purchase an equipment for $4,000. The equipment will provide benefits worth $900 a year. The expected life of the equipment is 8 years. It is expected that the price of the equipment will decrease by 15% per year. If the discount rate is 12%, would you buy the equipment today or will wait to purchase? When is the best time to purchase it? give excel file solution
You can purchase an equipment for $4,000. The equipment will provide benefits worth $900 a year. The expected life of the equipment is 8 years. It is expected that the price of the equipment will decrease by 15% per year. If the discount rate is 12%, would you buy the equipment today or will wait to purchase? When is the best time to purchase it?
Mark Weinstein has been working on an advanced technology in laser eye surgery. His technology will be available in the near term. He anticipates his first annual cash flow from the technology to be $176,000, received two years from today. Subsequent annual cash flows will grow at 3.6 percent in perpetuity. What is the value of the technology next year if the discount rate is 9 percent? What is the present value of the technology if the discount rate is 9 percent? (Do not round intermediate calculations and round your answer to 2 decimal places, e.g., 32.16.) Present value
Suppose you have opened an MRI clinic and you are able to purchase a new MRI machine for $1 million. You plan to see 2000 patients per year, and you have determined that your MRI machine at that rate of use should last 10 years. Given a 5% rate of interest, use an annuity calculation to estimate the annual cost of an MRI per patient. Suppose that you could use the machine for 3 years and then sell it for $500,000. What would your annual cost per patient be in that case? Suppose you know that inflation is going to be 10% per year and that you will use the machine for 3 years and then be able to sell it for $800,000 (note that the $800,000 is measured in units of dollars 3 years from now). What then is your annual cost per patient and is your answer in dollars today or dollars three years from now?
Please solve correctly . You are considering purchasing a dump truck. The truck will cost $75,000 and have operating and maintenance costs that start at $18,000 the first year and increases by $2,000 per year. Assume that the salvage value at the end of five years is $22,000 and interest rate is 15%. What is the annual operation and maintenance costs of owning this vehicle?
Elijah Enterprises will need to upgrade the computer system in 6 years. They anticipate the upgrade to cost $106,200. If the discount rate is 13%, what will be the required yearly investment needed to obtain the money for the upgrade?Round your (1+R)^n value to 2 decimal places and use that number for your final amount required rounded to the nearest dollar.
Imagine that you are trying to evaluate the economics of purchasing an automobile. You expect the car to provide annual cash benefits of $1,200 at the end of each year, and assume that you can sell the car for proceeds of $5,000 at the end of the planned 5-year ownership period. All funds which are you use has 6% discount rate. What should be the required return applicable to valuing the car.
Your goal is to spend a year traveling around the world. You assume that it will cost $100,000 to accomplish this goal and you have 10 years to save for it. You presently have $10,000 to invest. What annual rate of compounding interest must you earn on your investment to cover the cost of this trip?
Rental equipment is for sale for $110,000. A prospective buyer estimates he would keep the equipment for 12 years and spend $6000 a year on maintaining it. Estimated annual net receipts from equipment rentals would be $14,400. It is estimated the rental equipment could be sold for $80,000 at the end of 12 years. If the buyer wants a 7% rate of return on his investment, what is the maximum price he should pay for the equipment?
Your organization has been asked to invest in a continuing care retirement center. Your investment will be $600,000 per year for the next 5 years. After 5 years, cash flows will be $400,000 per year for the next 15 years. If your discount rate is 10%:(a) what is the present value of the investment?(b) what is the present value of the cash flows?(c) what is the profitability index?
Kermit is considering purchasing a new computer system. The purchase price is $132,738. Kermit will borrow one-fourth of the purchase price from a bank at 10 percent per year compounded annually. The loan is to be repaid using equal annual payments over a 3-year period. The computer system is expected to last 5 years and has a salvage value of $8,708 at that time. Over the 5-year period, Kermit expects to pay a technician $20,000 per year to maintain the system but will save $68,856 per year through increased efficiencies. Kermit uses a MARR of 12 percent to evaluate investments. What is the net present worth for this new computer system?

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