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    Present Value Calculations

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    1. Super-Fix Company would like to move its auto repair shop to a downtown location in order to attract more customers. What is the maximum Super-Fix should pay to purchase a building at the new location, assuming that the company needs to earn 12%. The new building will last 40 years. Super-Fix estimates that moving to the new location will result in a $10,000 increase in annual income.

    2. If Audrey Ostler buys a new small automobile that costs $14,000 and provides annual gasoline savings of $1,200, how long must she own the car before the savings justify its cost? Assume an 8% cost of capital.

    Consider each part independently

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    Solution Preview

    1. Super-Fix Company would like to move its auto repair shop to a downtown location in order to attract more customers. What is the maximum Super-Fix should pay to purchase a building at the new location, assuming that the company needs to earn 12%. The new building will last 40 years. Super-Fix estimates that moving to the new location will result in a $10,000 increase in annual ...

    Solution Summary

    Carries out Present Value Calculations.

    $2.49

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