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Consider a firm with a contract to sell an asset for $151,000 four years from now. The asset costs $87,000 to produce today. a. Given a relevant discount rate of 13 percent per year, calculate the profit the firm will make on this asset. (A loss should be indicated by a minus sign. Do not round intermediate calculations and round your answer to 2 decimal places, e.g., 32.16.) b. At what rate does the firm just break even?

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Based on the cost to make the asset today and the selling price four years from now, the profit today will be $5,611.12.

What is the profit made?

The profit made can be found as:

= Present value of selling price - Asset cost

Solving gives:

= (151,000 / (1 + 13%)⁴) - 87,000

= $5,611.13

In conclusion, the profit is $5,611.13.

Find out more on discount rates at https://brainly.com/question/1153417.

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