A 12-cylinder heavy-duty diesel engine will have a guaranteed residual value of $1,000 in five years. Today (year 0) the equivalent worth of this engine is how much if the interest rate is 9% per year? (4.6)
Question 4.H: A 12-cylinder heavy-duty diesel engine will have a guarantee...
We are given F ($1,000), N (5 years) and i (9%) and we wish to determine
P at year 0:
P = $1,000 (P/F, 9%, 5) = $1,000 (0.6499) = $649.90
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