For the cash flows shown below, determine (a) the future worth in year 6 and (b) the equivalent Annual value for years 0 through 12. (Use gradient and annual equivalent series formulas in calculations)
For the cash flows shown below, determine (a) the future worth in year 6 and (b) the equivalent Annual value for years 0 through 12. (Use gradient and annual equivalent series formulas in calculations)
Chapter1: Making Economics Decisions
Section: Chapter Questions
Problem 1QTC
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Transcribed Image Text:Give an example about a project that we need to use incremental ROR analysis.
For the cash flows shown below, determine (a) the future worth in year 6 and (b) the equivalent Annual value for
years 0 through 12. (Use gradient and annual equivalent series formulas in calculations)
Cash Flow $/yr
Year
0
1-2
3-5
6
7
8
9
10
11-12
-50000
6000
6000
5500
6000
6500
7000
7500
8000
Interest ratio
Monthly effective interest rate (2,1)%
(10)% per year, compounded quarterly
Effective interest rate for 24 months (13)%
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