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Ch+6+Pr+13 2

# Ch+6+Pr+13 2 - Present value of \$1 n=10 i=12(from Table 2...

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Problem 6-13 Choose the option with the lowest present value of cash outflows, net of the present value of any cash inflows. (Cash outflows are shown as negative amounts; cash inflows as positive amounts) 1. Buy option: PV = - \$160,000 - 5,000 (5.65022) + 10,000 (.32197) Present value of an ordinary annuity of \$1: n=10, i=12% (from Table 4)
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Unformatted text preview: Present value of \$1: n=10, i=12% (from Table 2) PV = - \$160,000 - 28,251 + 3,220 PV = - \$185,031 2. Lease option: PVAD = - \$25,000 (6.32825) = - \$158,206 Present value of an annuity due of \$1: n=10, i=12% (from Table 6) Kiddy Toy should lease the machine....
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