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:

$$\begin{gathered} q=4.12\mathrm{\%}=1+{\displaystyle \frac{4.12}{100}}=1.0412 \\ a=21500\cdot q+23550=21500\cdot 1.0412+23550={\displaystyle \frac{229679}{5}}=45935.8={\displaystyle \frac{229679}{5}}\text{ USD}=45935.8\text{ USD } \\ a<46000 \end{gathered}$$

Try another example

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.

1 year ago  Like

Next similar math problems:

• Here is
  Here is a data set (n=117) that has been sorted. 10.4 12.2 14.3 15.3 17.1 17.8 18 18.6 19.1 19.9 19.9 20.3 20.6 20.7 20.7 21.2 21.3 22 22.1 22.3 22.8 23 23 23.1 23.5 24.1 24.1 24.4 24.5 24.8 24.9 25.4 25.4 25.5 25.7 25.9 26 26.1 26.2 26.7 26.8 27.5 27.6 2
• Precious metals
  In 2006-2009, the value of precious metals changed rapidly. The data in the following table represent the total rate of return (in percentage) for platinum, gold, an silver from 2006 through 2009: Year Platinum Gold Silver 2009 62.7 25.0 56.8 2008 -41.3 4
• Retirement annuity
  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
• Exponential decay
  A tank contains 55 liters of water. Water is flowing out at the rate of 7% per minute. How long does it take to drain the tank?
• Compound interest 3
  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)
• Complaints
  The table is given: days complaints 0-4 2 5-9 4 10-14 8 15-19 6 20-24 4 25-29 3 30-34 3 1.1 What percentage of complaints were resolved within 2weeks? 1.2 calculate the mean number of days to resolve these complaints. 1.3 calculate the modal number of day
• Car down
  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.
• Present value
  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?
• Loan 4
  Mr santos borrowed Php.18,000 at 1.5% interest for one year. What was the total amount he paid for the end of the 1-year term?
• Mortage hypo loan
  The Jonáš family decided to buy an older apartment, which cost EUR 30,000. They found EUR 17,000 and took the loan with the bank for the remaining amount. What interest did they receive if they repay this amount for 15 years at EUR 120 per month?
• Savings
  The depositor regularly wants to invest the same amount of money in the financial institution at the beginning of the year and wants to save 10,000 euros at the end of the tenth year. What amount should he deposit if the annual interest rate for the annua
• Used cars
  Peter plans to buy a used car: the first car Renault Espace 2.0 dCi 16V Dynamique 2006, costs 2000 euros. It is 14 years old and has a combined diesel consumption of 8 liters. / 100 km. Diesel costs 1.1 euros/liter. How much will the car cost him to opera
• Reducing balance method
  A company buys an item having a useful life of 10 years for 1,000,000. If the company depreciates the item by the reducing balance method, a. Determine the depreciation for the first year. b. Estimate the depreciation for the second and third years. c. Wh
• Speed of Slovakian trains
  Rudolf decided to take the train from the station 'Ostratice' to 'Horné Ozorovce'. In the train timetables found train Os 5409 : km 0 Chynorany 15:17 5 Ostratice 15:23 15:23 8 Rybany 15:27 15:27 10 Dolné Naštice 15:31 15:31 14 Bánovce nad Bebravou 15:35 1
• Fresh juice
  The seller offers fresh-squeezed juice, which the customer either pours into his own containers or sells it in liter plastic bottles, which the customer buys from him. A liter of juice costs 40 CZK more than a bottle. There is no charge for turning the ju
• Quiz or test
  I have a quiz with 20 questions. Each question has 4 multiple choice answers, A, B, C, D. THERE IS NO WAY TO KNOW THE CORRECT ANSWER OF ANY GIVEN QUESTION, but the answers are static, in that if the "correct" answer to #1 = C, then it will always be equal
• Chickens and rabbits
  In the yard were chickens and rabbits. Together they had 27 heads and 86 legs. How many chickens and how many rabbits were in the yard?