Question

Martell Products Inc. can purchase a new copier that will save $4,000 per year in copying...

Martell Products Inc. can purchase a new copier that will save $4,000 per year in copying costs. The copier will last for twelve years and have no salvage value.

    

Click here to view Exhibit 11B-2, to determine the appropriate discount factor using tables.
Required:
1-a.

What is the maximum purchase price that Martell Products should be willing to pay for the copier if the company’s required rate of return is eight percent? (Round discount factor to 3 decimal places, intermediate and final answer to the nearest dollar amount.)
  Present value $   

     

1-b.

What is the maximum purchase price that Martell Products should be willing to pay for the copier if the company’s required rate of return is twelve percent? (Round discount factor to 3 decimal places, intermediate and final answer to the nearest dollar amount.)
  Present value $   
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