00:01
Okay, so basically we're going to be looking at an interesting scenario that's given that we have an interest rate of 10 % per year.
00:10
The peritual equivalent annual cost of 70 ,000 now, $100 ,000 at the end of year 6 ,000 and $10 ,000 per year from the end of year 10 through infinity is closest to which values, several options.
00:30
Given there so we want to find out which so first of all we just want to get the information right the interest rate is actually 10 percent per annum and that we are looking at a perpetual equivalent annual cost of 70 ,000 so we just put this at annual cost perpetual equivalent of 70 thousand dollars now and then we have 100 ,000 at the end of year six, right? it's going to be at the end of year, $600 ,000.
01:09
And at the end of year 10, um, so and $10 ,000 per year from the end of year 10.
01:20
Okay, from the end of year 10, okay, from the end of year 10, it's going to be $10 ,000 per year.
01:26
Okay.
01:27
So basically, uh, what does the, uh, this is closest to what value okay so we're going to make use of our financial calculators basically to understand that we look at the the present value is equal to we're going to be looking at 70 ,000 $70 ,000 plus okay so let's just get 70 ,000 thousand dollars, 70 ,000 plus 100 ,000.
02:15
Because 70 ,000 is now plus 100 ,000 in 10 % and 6 years...