A DSL company has made an equipment investment of $40 million with the expectation that it will be recovered in 10 years. The company has a MARR based on a real rate of return of 12% per year. If inflation is 7% per year, how much must the company make each year (a) in constant-value dollars, and (b) in future dollars, to meet its expectation?
A DSL company has made an equipment investment of $40 million with the expectation that it will be recovered in 10 years. The company has a MARR based on a real rate of return of 12% per year. If inflation is 7% per year, how much must the company make each year (a) in constant-value dollars, and (b) in future dollars, to meet its expectation?
Chapter11: Capital Budgeting Decisions
Section: Chapter Questions
Problem 20EA: Towson Industries is considering an investment of $256,950 that is expected to generate returns of...
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A DSL company has made an equipment investment
of $40 million with the expectation that it will be
recovered in 10 years. The company has a MARR
based on a real
is 7% per year, how much must the company
make each year (a) in constant-value dollars, and
(b) in future dollars, to meet its expectation?
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