The optical products division of Panasonic is plan­ning a $3.5 million building expansion for manu­facturing its powerful Lumix DMC digital zoom camera. If the company uses an interest rate of 16% per year, compounded quarterly for all new investments, what is the uniform amount per quar­ter the company must make in order to recover its investment in 3 years?

What will be an ideal response?


PP = quarter; CP = quarter; effective i = 4% per quarter
A = 3.5(A/P,4%,12) (in $ million)
= 3.5(0.10655)
= $0.37293 ($372,930 per quarter)

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