A company wants to choose from 3 products.
Product 1 cost $27,000 and has a salvage value of $300
Product 2 cost $19,000 and has a salvage value of $250
Product 3 cost $21,000 and has a salvage value of $350
If we finance product 1 at 10% APR, 5% for Product 2 and 0% for Product 3, which unit would they pick? Compare the present values of each project. Does the term of the loan make a difference?
Compute the PV of each of the three products for 1 through 10 years. Each year to show a PV.