Problem 02.054 -Calculation of unknown project life dering the purchase of a bul

Question

Problem 02.054 -Calculation of unknown project life dering the purchase of a bulding it currently leases for $30,000 per year. The owner of the building put it up for sale at a price of $180,000, but because the firm has been a good tenant, the of $160,000 now. If purchased now, how long wil it be before the company recovers its investment Solve by using the NPER function owner offered to sell It to RKE for a cash price long will it be before the company recovers its investment at an interest rate of 12% per year? The company will recover its investment in years

Explanation / Answer

Time period = n

PV = $160000

annual payments made (otherwise) = $30000

160000 = 30000/(1 + 12%) + .... + 30000/(1 + 12%)n

Solve for 'n':

n = nper(12%,-30000,160000)

n = 9.015 years

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