et/quiz?ctx-Mblaisde-0139&quiz; action-takeQuiz&quiz; probGuid-Q4PLCOA8010100000

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et/quiz?ctx-Mblaisde-0139&quiz; action-takeQuiz&quiz; probGuid-Q4PLCOA801010000003adc25foobo6b0&cR; HL131230003 Home GradesPersonalized Reviews Discussion Course Materials Investment, the Capital Market, and the Wealth of Nations (Mobile-Enabled) Graded Assignment Due Sunday 1203.17 at 11:00 PM Do No Harm: 1 Attempts 7. Calculating present value with infinite income streams Read No Evil (RNE) is a firm specializing in the destruction of sensitive documents. An industrial paper shredder costs $7,083. If bought, it would s net income by an additional s850 per year. The machine is designed to last forever and never require maintenance. If the frm does not purchase the machine, it will put the money into an interest-bearing bank account At which interest rates would RNE rather buy the machine than put the money in a bank account? Check alil that apply. 11% Copyright Noticas Terms of UsePrivacy NoticeSecurity Notice Accessibility

Explanation / Answer

Cost of paper shredder = $7,083; Additional net income brought in = $850 per year.

Interest rate that would make RNE buy the machine:

$7,083 / r = $850

r = 7,083 / 850 = 8.33%

• (i) 8%.

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