1. An initial $400,000 investment in new production equipment will yield annual positive cash fl ows of $150,000 in year 1. Annual cash fl ows will decrease by $25,000 each year thereafter. The new equipment has a useful life of 7 years. MARR is 10% per year. Determine the DPBP of this project.

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10%, planning Given: Net cash flows as shown in Table 4.1; MARR = horizon = 7 years Find: DPBP TABLE 4.1 Net Cash Flows for Example 4.6 = 0 1234567 Net Cash Flow -$400,000 150,000 125,000 100,000 75,000 50,000 25,000 0