You have just been offered a contract worth $1.07 million per year for 7 years. However, to take the contract, you will need to purchase some new equipment. Your discount rate for this project is 11.8%. You are still negotiating the purchase price of the equipment. What is the most you can pay for the equipment and still have a positive NPV? The most you can pay for the equipment and achieve the 11.8% annual return is $ million. (Round to two decimal places.)
You have just been offered a contract worth $1.07 million per year for 7 years. However, to take the contract, you will need to purchase some new equipment. Your discount rate for this project is 11.8%. You are still negotiating the purchase price of the equipment. What is the most you can pay for the equipment and still have a positive NPV? The most you can pay for the equipment and achieve the 11.8% annual return is $ million. (Round to two decimal places.)
Essentials Of Investments
11th Edition
ISBN:9781260013924
Author:Bodie, Zvi, Kane, Alex, MARCUS, Alan J.
Publisher:Bodie, Zvi, Kane, Alex, MARCUS, Alan J.
Chapter1: Investments: Background And Issues
Section: Chapter Questions
Problem 1PS
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![You have just been offered a contract worth $1.07 million per year for 7 years. However, to take the contract, you
will need to purchase some new equipment. Your discount rate for this project is 11.8%. You are still negotiating
the purchase price of the equipment. What is the most you can pay for the equipment and still have a posítive
NPV?
The most you can pay for the equipment and achieve the 11.8% annual return is $ million. (Round to two
decimal places.)](/v2/_next/image?url=https%3A%2F%2Fcontent.bartleby.com%2Fqna-images%2Fquestion%2F6df95d2b-42bf-49ce-8f9c-2bad8f2ecdb6%2Fb7f6e27f-d23a-4afb-aca1-2339026387a0%2Fostidth_processed.jpeg&w=3840&q=75)
Transcribed Image Text:You have just been offered a contract worth $1.07 million per year for 7 years. However, to take the contract, you
will need to purchase some new equipment. Your discount rate for this project is 11.8%. You are still negotiating
the purchase price of the equipment. What is the most you can pay for the equipment and still have a posítive
NPV?
The most you can pay for the equipment and achieve the 11.8% annual return is $ million. (Round to two
decimal places.)
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