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- Problem2. Josh created two cash flow diagrams shown at the bottom of this page. The cash flows for alternative B represent two life cycles of A. Calculate the annual worth value of each over the respective life cycles to demonstrate that they are the same. Use an interest rate of 10% per year. Alternative A Alternative B $1000 i = 10% per year $1000 1 3 2 3 4 5 6 Year Year $25 $25 $25 $25 $25 $25 $25 $25 $25 $4000 $5000 $5000 2.Find the equivalent annual payment of the following obligations at 20% interest rate. End of Year Payment 1 P 8,000 2 P 7,000 3 P 6,000 4 P 5,0008- Consider four mutually exclusive and a do-nothing 15 alternatives, each having an 10-year useful life: A В C D First cost $1000 $800 $600|$500 Uniform annual |125 |120 |100 | 125 benefit Salvage value 750 500 250 0 (a) Construct a choice table for interest rates from 0% to 100%. (b) If the minimum attractive rate of return is 8%, which alternative should be selected?
- 30. The excess between the selling price and total variable costs is known as?Q3:How much money must you deposit in year 6 if you deposit $5000 now and you want to have $12,000 at the end of year 11? Assume your deposits earn interest at 6% per year. [40 marks]Which of the following is false with regards to supply and demand? Demand curve shows the number of units people are willing to buy and cost per unit (decreasing curve). Supply curve shows the number of units that vendors will offer for sale and unit price (increasing curve). The intersection of the supply curve and demand curve is known as the exchange price. O All the other choices are true. None is false.
- 2. If the price/demand function is p-50-1.25x and the total cost function is 160+10x, where x is the number of units (D) in thousands and cost is in dollars, determine the following; a. General Equation of the Total Profit (profit function) b. General Equation of the Total Revenue (revenue function) Breakeven points Note: Put Final Answer in the yellow box C.Suppose your firm is considering investing in a project with the cash flows shown below, that the required rate of return on projects of this risk class is 12 percent, and that the maximum allowable payback and discounted payback statistics for your company are 2.5 and 3.0 years, respectively. Time: Cash flow: 0 1 2 3 -$227,000 $65,000 $83,200 $140,200 4 $121,200 5 $80,400 Use the payback decision rule to evaluate this project. Note: Round your answer to 2 decimal places. Payback yearsEngineering Economics Subject A cash flow series is increasing geometrically at the rate of 10% per year. The initial payment at time 3 is $10,000 with increasing annual payments ending at time 50. Interest rate is 15% compounded annually for the first 15 years and 5% compounded annually for the remaining 35 years. Find the present worth equivalent to this cash flow.
- An employee is earning $ 18,000 a month and he can only afford to purchase a car which will require a down payment of $ 80,000 and a monthly amortization of 30% of his monthly salary. What would be the maximum cash value of a car he can purchase if the seller will agree to a down payment of $ 80,000 and the balance payable in four years at 12% per year payable in monthly basis. The first payment will be due at the beginning of the first month. Include cashflow diagram and formulas.Your future company has purchased a machine and has entered into a contract that requires the company to pay $2000 each year for the upgrade of machine components at the end of years 6, 7, and 8. In anticipation of the upgrade cost, your company has decided to deposit equal amounts ( X ) at the end of each year for five years in a row in an account that pays i = 6% . The first deposit is made at the end of the first year. What is the value of X?Do the task as given and solve it with Excel. Show solutions.