Atlas Transportation is considering installing temperature logger in all its refrigerated trucks for monitoring temperatures during transit. If the systems will reduce insurance claims by $40,000 per year for 5 years how much should the company be willing to spend now if it uses an interest rate of 12% compounded quarterly

$144191.05

Explanation:

Solution

Recall that:

The insurance claim reduction is =$40,000

The time = 5 years

The interest rate = 5%

Now,

We find how much the company be willing to spend if it uses an interest rate of 12% compounded quarterly.

The present value is computed as follows:

The Present Value of the saving (PV) = 40000/(1+12%) + 40000/(1+12%)2 +40000/(1+12%)3 +40000/(1+12%)4 +40000/(1+12%)5

= $144191.05

Hence, the maximum amount the company should be freely spend is

= $144191.05

one of the disadvantages of getting a government sponsored mortgage is they put a limit on the purchase price of the house. because the government is in charge of the mortage loan and terms, they are able to control how much money they are allowing someone to take out for the loan. not only are they incontrol, it's a lengthy process for a government sponsored mortgage.

answer; im thinking the correct answer is (7years);