Answer:
If they sell this generator, the firm will make profit of "20,769.036". A further solution is provided below.
Explanation:
According to the question,
The present value of generator will be:
= [tex]\frac{FV}{(1+r)^n}[/tex]
= [tex]\frac{165000}{(1+0.095)^4}[/tex]
= [tex]\frac{165000}{(1.095)^4}[/tex]
= [tex]\frac{165000}{1.43767}[/tex]
= [tex]114,769.036[/tex]
hence,
The profit will be:
= [tex]114,796.036-94000[/tex]
= [tex]20,769.036[/tex]
