Restoring balance to the nitrogen cycle is one of the challenges facing engineers. Improving the effectiveness and economical use of fertilizer has been identified as an important step in the right direction. Engineers have designed an improved way to transport fertilizer and then to apply it directly at the point where crops are grown. Further development, assessment, and optimization of the necessary equipment is estimated to require $235,000 in year 1, increasing by a gradient of $65,000 in each of years 2, 3, and 4. Then, it will begin to decrease by $75,000 in years 5, 6, 7, and 8. Interest is 14% per year. Part a What is the present worth equivalent of these 8 cash flows? Click here to access the TVM Factor Table calculator. $
Restoring balance to the nitrogen cycle is one of the challenges facing engineers. Improving the effectiveness and economical use of fertilizer has been identified as an important step in the right direction. Engineers have designed an improved way to transport fertilizer and then to apply it directly at the point where crops are grown. Further development, assessment, and optimization of the necessary equipment is estimated to require $235,000 in year 1, increasing by a gradient of $65,000 in each of years 2, 3, and 4. Then, it will begin to decrease by $75,000 in years 5, 6, 7, and 8. Interest is 14% per year. Part a What is the present worth equivalent of these 8 cash flows? Click here to access the TVM Factor Table calculator. $
Chapter1: Making Economics Decisions
Section: Chapter Questions
Problem 1QTC
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Transcribed Image Text:Restoring balance to the nitrogen cycle is one of the challenges facing engineers. Improving the effectiveness and economical use of
fertilizer has been identified as an important step in the right direction. Engineers have designed an improved way to transport
fertilizer and then to apply it directly at the point where crops are grown. Further development, assessment, and optimization of the
necessary equipment is estimated to require $235,000 in year 1, increasing by a gradient of $65,000 in each of years 2, 3, and 4. Then,
it will begin to decrease by $75,000 in years 5, 6, 7, and 8. Interest is 14% per year.
Part a
What is the present worth equivalent of these 8 cash flows?
Click here to access the TVM Factor Table calculator.
$
Carry all interim calculations to 5 decimal places and then round your final answer to a whole number. The tolerance is ±10.
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