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Callao Missouri | Time value of money says a dollar today is worth more than a dollar tomorrow. So if you are buying a piece of equipment based upon the expectation of a future cash flow you need to take that expectation times a discount rate to determine the present value of the future cash flow. Many times you will find that "Golden Egg" is really not as good of a deal as what you thought it was. I guess what I am trying to say is why would you pay more for a chunk of iron based upon the theory that it might be worth something more, when you can pay less for another iron and it should be worth proportionally less in the same period of time. Plus you have not lost the interest or opportunity cost of having you money tied up in the more expensive item. Clear as mud? Jon | |
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Resale value
