8. Calculating present value with infinite income streams
PowerPro Supply is a firm that manufactures industrial equipment and uses laser cutting machines in their processes. A laser cutting machine costs $34,875. If bought, it would raise PowerPro’s net income by an additional $2,790 per year. The laser cutting machines are designed to last forever and never require maintenance. If the firm does not purchase the laser cutting machine, it will put the money into an interest-bearing bank account.
At which interest rates would PowerPro Supply rather buy the equipment than put the money in a bank account? Check all that apply.
4%
5%
11%
13%