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21 March, 06:24

Garland Mills purchased a certain piece of machinery 4 years ago for $500,000. Its present resale value is $340,000. Assuming that the machine's resale value decreases exponentially, what will it be 5 years from now? (Round your answer to the nearest dollar.)

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  1. 21 March, 06:41
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    The machine's resale value in 5 years from now will be $309,392

    Explanation:

    Future value = present value*exp (cx)

    $340,000 = $500,000*exp (4c)

    17/25 = exp (4c)

    c = - 0.096

    Future value = present value*exp (cx)

    = $500,000*exp (-0.096*5)

    = $309,391.70

    Therefore, The machine's resale value in 5 years from now will be $309,392
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