SM1 InvestmentTE PROBLEMAAnnual operating Cost. Began first (1)year until the 8 year.(A=$1,500)Annual Revenues: Began first (1)year until the 8th year.(A-$4,000)Additional Expenses: Geometric Series of $2,000 beginning thethird (3nd) year increasing by 5% (f=5%) until the 8th year.Salvage Value at the end of 8th year or MV - $2,000Investment life n-8 years. MARR-6%$7,0001,5004,000A-$2,000 f-05MV-$2,000a. Draw the cash flow diagramb. PW, AW and FW Determine if the investment is viable or not.C. IRR

Initial investment P0=7000 Annual operating cost: OC =1500 Annual revenue R=4000 Additional…

Investment $7,000 Annual operating Cost. Began first (1)year until the 8th year. (A-$1,500) Annual Revenues: Began first (1)year until the 8th year. (A=$4,000) Additional Expenses: Geometric Series of $2,000 beginning the A-$2,000 f.05 third (3nd) year increasing by 5% (f=5%) until the 8th year. th Salvage Value at the end of 8 year or MVs- $2,000 Investment life n-8 years. MARR-6% 1,500 4,000 MV3- $2,000 a. Draw the cash flow diagram b. PW, AW and FW Determine if the investment is viable or not. C. IRR

Investment $7,000 Annual operating Cost. Began first (1)year until the 8th year. (A-$1,500) Annual Revenues: Began first (1)year until the 8th year. (A=$4,000) Additional Expenses: Geometric Series of $2,000 beginning the A-$2,000 f.05 third (3nd) year increasing by 5% (f=5%) until the 8th year. th Salvage Value at the end of 8 year or MVs- $2,000 Investment life n-8 years. MARR-6% 1,500 4,000 MV3- $2,000 a. Draw the cash flow diagram b. PW, AW and FW Determine if the investment is viable or not. C. IRR

ENGR.ECONOMIC ANALYSIS

14th Edition

ISBN:9780190931919

Author:NEWNAN

Publisher:NEWNAN

Chapter1: Making Economics Decisions

Section: Chapter Questions

Problem 1QTC

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Question

SM1

Investment
TE PROBLEMA
Annual operating Cost. Began first (1)year until the 8 year.
(A=$1,500)
Annual Revenues: Began first (1)year until the 8th year.
(A-$4,000)
Additional Expenses: Geometric Series of $2,000 beginning the
third (3nd) year increasing by 5% (f=5%) until the 8th year.
Salvage Value at the end of 8th year or MV - $2,000
Investment life n-8 years. MARR-6%
$7,000
1,500
4,000
A-$2,000 f-05
MV-$2,000
a. Draw the cash flow diagram
b. PW, AW and FW Determine if the investment is viable or not.
C. IRR

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