Fight Finance

Courses  Tags  Random  All  Recent  Scores

Scores
keithphw$5,821.61
an4_bolt$4,086.43
Skywalke...$1,020.00
jtfan2$903.09
Visitor$850.00
Carolll$803.33
trungbin$803.09
Jade$785.80
cuiting$779.70
Visitor$770.00
Visitor$760.00
Visitor$700.00
Visitor$680.00
Visitor$650.00
Visitor$650.00
Visitor$650.00
alison$644.70
ninalee$639.70
Kyrie Ir...$590.00
Visitor$570.68
 

Question 281  equivalent annual cash flow

You just bought a nice dress which you plan to wear once per month on nights out. You bought it a moment ago for $600 (at t=0). In your experience, dresses used once per month last for 6 years.

Your younger sister is a student with no money and wants to borrow your dress once a month when she hits the town. With the increased use, your dress will only last for another 3 years rather than 6.

What is the present value of the cost of letting your sister use your current dress for the next 3 years?

Assume: that bank interest rates are 10% pa, given as an effective annual rate; you will buy a new dress when your current one wears out; your sister will only use the current dress, not the next one that you will buy; and the price of a new dress never changes.




Copyright © 2014 Keith Woodward