4. Determine the equal, end of period , annual worth of a process which will involve an initial outlay of $95000 followed by costs of $11000 at the end of yearl and amounts increasing by $1500 per year through its 14 year life. Assume that the interest rate is 9% per year.

4. Determine the equal, end of period , annual worth of a process which will involve an initial outlay of $95000 followed by costs of $11000 at the end of yearl and amounts increasing by $1500 per year through its 14 year life. Assume that the interest rate is 9% per year.

Intermediate Financial Management (MindTap Course List)

13th Edition

ISBN:9781337395083

Author:Eugene F. Brigham, Phillip R. Daves

Publisher:Eugene F. Brigham, Phillip R. Daves

Chapter12: Capital Budgeting: Decision Criteria

Section: Chapter Questions

Problem 1P: A project has an initial cost of 40,000, expected net cash inflows of 9,000 per year for 7 years,...

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Concept explainers

Present Value

Present value (PV) is defined as the current or present value of all future sums of cash flow or money at a specified rate of return. This rate of return is known as the discounted rate, which is essentially the interest rate, discounted over some time. The expected cash flows are discounted at a discount rate to compute the present value. The higher the discount rate, the higher the future value (FV), but the lower the present value.

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4. Determine the equal, end of period, annual worth of a process which will involve
an initial outlay of $95000 followed by costs of $11000 at the end of yearl and
amounts increasing by $1500 per year through its 14 year life. Assume that the interest
rate is 9% per year.

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