Drilling machine

A manufacturing firm purchased a heavy duty drilling machine. They were given two payment options:
Option 1: Make a payment of $46,000 immediately to settle the invoice for the machine.
Option 2: Make a payment of $21,500 immediately and the balance of $23,550 in 3 months to settle the invoice.
If money is worth 4.12% compounded quarterly, answer the following:
What is the total present value of Option 2?

Correct result:

a =  45935.8 USD

Solution:

q=4.12%=1+4.12100=1.0412  a=21500 q+23550=21500 1.0412+23550=2296795=45935.8=2296795 USD=45935.8 USD a<46000



We would be pleased if you find an error in the word problem, spelling mistakes, or inaccuracies and send it to us. Thank you!






Showing 1 comment:
#
Dr Math
From our user:

Hi Peter,

Thank you for your time, I have checked your answer and it is still showing as wrong.

avatar









Tips to related online calculators
Our percentage calculator will help you quickly calculate various typical tasks with percentages.
Do you want to convert time units like minutes to seconds?

You need to know the following knowledge to solve this word math problem:

Next similar math problems:

  • Saving 9
    penize_40 An amount if $ 2000 is invested at an interest of 5% per month. if $ 200 is added at the beginning of each successive month but no withdrawals. Give an expression for the value accumulated after n months. After how many months will the amount have accumul
  • Compound interest 3
    exp_growth2 After 8 years, what is the total amount of a compound interest investment of $25,000 at 3% interest, compounded quarterly? (interest is now dream - in the year 2019)
  • If you 4
    exp_growth If you deposit $2500 in an account paying 11% annual interest compounded quarterly, how long until there is the $4500 in the account?
  • Retirement annuity
    bankovka How much will it cost to purchase a two-level retirement annuity that will pay $2000 at the end of every month for the first 10 years, and $3000 per month for the next 15 years? Assume that the payment represent a rate of return to the person receiving th
  • Four pupils
    four_digit Four pupils divided $ 1485 so that the second received 50% less than the first, the third 1/2 less than a fourth and fourth $ 154 less than the first. How much money had each of them?
  • Car down
    car_1 Sarah buys a car costing $12,500. It depreciates in value by 8% in the first year, 10% the second year and 5% in the third year. Calculate the value of a car after the third year.
  • Future value
    penize_2 Suppose you invested $1000 per quarter over a 15 years period. If money earns an anual rate of 6.5% compounded quarterly, how much would be available at the end of the time period? How much is the interest earn?
  • Loan
    loan Apply for a $ 59000 loan, the loan repayment period is 8 years, the interest rate 7%. How much should I pay for every month (or every year if paid yearly). Example is for practise geometric progression and/or periodic payment for an annuity.
  • Tabitha
    factory_butter_7 Tabitha manufactures a product that sells very well. The capacity of her facility is 241,000 units per year. The fixed costs are $122,000 per year, and the variable costs are $11 per unit. The product currently sells for $17. a. What total revenue is requ
  • Compound Interest
    exp_growth2 If you deposit $6000 in an account paying 6.5% annual interest compounded quarterly, how long until there is $12600 in the account?
  • If you 2
    exp_growth If you deposit $4000 into an account paying 9% annual interest compounded monthly, how long until there is $10000 in the account?
  • How much 2
    bank2_1 How much money would you need to deposit today at 5% annual interest compounded monthly to have $2000 in the account after 9 years?
  • If you 3
    bank2 If you deposit $4500 at 5% annual interest compound quarterly, how much money will be in the account after 10 years?
  • Present value
    exp_growth A bank loans a family $90,000 at 4.5% annual interest rate to purchase a house. The family agrees to pay the loan off by making monthly payments over a 15 year period. How much should the monthly payment be in order to pay off the debt in 15 years?
  • A loan
    exp_growth A loan in the amount of $944 is charged simple interest at an annual rate of 8.1%. How much money is owed 14 months after the loan was made?
  • A fisherman
    worms A fisherman buys carnivores to fish. He could buy either 6 larvae and 4 worms for $ 132 or 4 larvae and 7 worms per $ 127. What is the price of larvae and worms? Argue the answer.
  • Loan
    money_2 If you take a bank loan $ 10000 and we want to repay after the year, we have to pay the total amount $ 10320/ What is the annual interest rate on this loan?