Reading 27, page 79, #21 Basically we have to compute the Salvage value for year three (S3) 500k = 136,993 + [Sal-3 - .30(Sal-3 – 380,000/1.15^3] 363k = [Sal-3 - .30(Sal-3 – 380,000/1.15^3] 363k x 1.15^3 = 552,087 552,087 = Sal3 - .30(Sal3 – 380,000) 552,087 = [Salvage3 - .30 Salvage3 + 114,000] Sal3 - .30(Sal3) = 438,087 The CFA jumps to “.70 Sal 3 = 438,087” <> and I can’t figure this step out. Can someone please help me with this step… Sal3 = 625839,
it is just simple algebra. 1-0.3 = 0.7