For each of the following problems, (a) draw the cash flow diagram; (b) present clean and clear manual solutions to the problem; (c) highlight the final answer (only the final answer as required by the problem) by enclosing it within a box. An equipment has a first cost of $200,000, an annual operating cost of $50,000 and a salvage value of 25% of the first cost after 5 years; these estimates being in future dollars. Determine the present worth, assuming an interest rate of 10% and an average inflation rate of 4%.

Given: First cost=$200000 Operating cost per year for 5 year=$50000 Salvage Value=25% of the first…

Answered: An equipment has a first cost of…

ENGR.ECONOMIC ANALYSIS

14th Edition

ISBN:9780190931919

Author:NEWNAN

Publisher:NEWNAN

Chapter1: Making Economics Decisions

Section: Chapter Questions

Problem 1QTC

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For each of the following problems, (a) draw the cash flow diagram; (b) present clean and clear manual solutions to the problem; (c) highlight the final answer (only the final answer as required by the problem) by enclosing it within a box.

An equipment has a first cost of $200,000, an annual operating cost of $50,000 and a salvage value of 25% of the first cost after 5 years; these estimates being in future dollars. Determine the present worth, assuming an interest rate of 10% and an average inflation rate of 4%.

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