Duty Three: The engineers decided that a small amount of newly available chemical additives would increase the resistance of a building material by 20%. The manager of the factory arranged the purchase of the additive through a contract for a period of 5 years 6 and after at a price of $ 7,000 annually and at an interest of 10% installed annually and inflation of 10%, starting from one year from now. It is expected that the annual price will increase by $50 annually, starting from the sixth year until the year 13. In addition, an initial investment of $3,000 has been made to prepare a suitable site for the contractor to deliver the additive. Find the equivalent total present value of all these cash flows.
Duty Three: The engineers decided that a small amount of newly available chemical additives would increase the resistance of a building material by 20%. The manager of the factory arranged the purchase of the additive through a contract for a period of 5 years 6 and after at a price of $ 7,000 annually and at an interest of 10% installed annually and inflation of 10%, starting from one year from now. It is expected that the annual price will increase by $50 annually, starting from the sixth year until the year 13. In addition, an initial investment of $3,000 has been made to prepare a suitable site for the contractor to deliver the additive. Find the equivalent total present value of all these cash flows.
Essentials Of Investments
11th Edition
ISBN:9781260013924
Author:Bodie, Zvi, Kane, Alex, MARCUS, Alan J.
Publisher:Bodie, Zvi, Kane, Alex, MARCUS, Alan J.
Chapter1: Investments: Background And Issues
Section: Chapter Questions
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Transcribed Image Text:Duty Three: The engineers decided that a small
amount of newly available chemical additives
would increase the resistance of a building
material by 20%. The manager of the factory
arranged the purchase of the additive through a
contract for a period of 5 years 6 and after at a
price of $ 7,000 annually and at an interest of 10%
installed annually and inflation of 10%, starting
from one year from now. It is expected that the
annual price will increase by $50 annually, starting
from the sixth year until the year 13. In addition,
an initial investment of $3,000 has been made to
prepare a suitable site for the contractor to deliver
the additive. Find the equivalent total present
value of all these cash flows.
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