Martha is considering acquiring another piano for her piano academy. The cost of a new Steinway grand is around $148,000.

Martha is considering acquiring another piano for her piano academy. The cost of a new Steinway grand is around $148,000. Pianos depreciate at a rate of about 5% per year, and the academy’s investment fund typically earns a return of about 10% per year. Additional revenues obtained through the increased teaching capacity enabled by the piano and renting the piano out for performances are expected to be about $30,000 per year. a. Calculate the maximum price the piano academy is willing to pay for the piano. Maximum piano price: $ b. Should Martha acquire the piano? She should the piano.


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