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    Optimal time to abandon investment

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    1. An asset costs $247,000 and will generate cash benefits of $80,000 at the end of each year for six years for Hartford Corporation. Salvage values are $160,000, $145,000, $85,000, and $45,000 at the end of years 3, 4, 5, and 6 respectively. The required return is 5.25 percent.
    Please compute the net present value, and the equivalent annuity and record these below:
    Keep for 6 years ________________ ____________________
    Keep for 5 years ________________ ____________________
    Keep for 4 years ________________ ____________________
    Keep for 3 years ________________ ____________________
    When is the optimal time to abandon the investment?_____________________

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    Solution Summary

    An asset costs $247,000 and will generate cash benefits of $80,000 at the end of each year for six years for Hartford Corporation. Salvage values are $160,000, $145,000, $85,000, and $45,000 at the end of years 3, 4, 5, and 6 respectively. The required return is 5.25 percent.
    Please compute the net present value, and the equivalent annuity and record these below:
    Keep for 6 years ________________ ____________________
    Keep for 5 years ________________ ____________________
    Keep for 4 years ________________ ____________________
    Keep for 3 years ________________ ____________________
    When is the optimal time to abandon the investment?_____________________
    Credit Value: 1 Deadline: September 16, 2016, 2:21 pm

    $2.19