Question

Problem 5: A small oil company is planning to replace its Coriolis flow meters with Emerson...

Problem 5: A small oil company is planning to replace its Coriolis flow meters with
Emerson flow meters. The replacement process will cost the company $50,000 three
years from now. How much money must the company set aside each year beginning now
(year 0) in order to have the total amount available immediately after making the last
deposit at the end of year 3? Assume the company can invest its funds at 15% per year.
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Answer #1

It is the simple calculation of Present Value. We will use Microsoft Excel to determine the PV of FV $50,000 for 15% rate for 3 years time period as per the excel below:

The answer is

$32,875.81
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