Reynolds Leasing is a company that purchases equipment and then leases the equipment to hospitals. Reynolds is considering the purchase of diagnostic equipment that would cost them $300,000 to purchase. Reynolds would lease out the equipment to a hospital on a four-year lease, and then sell the equipment at a reduced price. Based on the lease payments that Reynolds would receive from the hospital, the maintenance costs, the expected resale price, and other issues, Reynolds is predicting the annual net cash flows as shown below:
Year
Net Cash Flow
Present Value
Year 0
($260,914)
Year 1
$80,000
Year 2
$94,400
Year 3
$88,400
Year 4
$41,600
Net Present Value:
Note: In the first year, Reynolds Leasing has a negative cash flow. Reynolds Leasing's discount rate is 9%. What is the net present value of Reynolds Leasing's entire investment over this five-year period?
George will graduate with a bachelor's degree in social work in May 2022. He is considering the completion of a Master's degree in social work so that he can hold a clinical position as a mental health social worker. The master's degree requires two years of academic training, so George would not graduate with his Master's degree until May 2024. He knows that most of his friends who have graduated recently with bachelor social work degrees are starting jobs that pay an average of $42,000 the first year, $43,000 the next year, and $44,000 the following year. Tuition and fees for the Master's in social work cost $18,000 per year. Once George has his two-year Master's degree in social work, he expects to earn about $60,000 per year as a mental health social worker. What are the total costs of receiving the first year of training in the Master's program?
a) $18,000
b) $42,000
c) $36,000
d) $60,000