1. Whenever Equivalence or Time Value of Money calculations are computed, Cash Flow Diagrams and Standard Notation are required.

2. Do not use Single Payment cash flow analysis when another method is available, such as Uniform Series and Gradients. If you do, you can expect to lose significant credit.

3. Use the Interest Factor Tables instead of the Factor Formulas whenever possible!

(25 Pts.) 2. The data for a new computer system is given in the table below. The useful life of the new system is 5 years with a salvage value of $5,000, and the company's tax rate is 50%. The IRS is allowing the company a straight line 5 year depreciation for this system. a. Complete the table below and then compute the Present Worth of the TAX cash flows using an investment rate of 8% per year compounded continuously b. Determine the Rate of Return (i) of the company's investment (CFAT cash flows). Income Expenses Depreciation ******** TI CFBT $18,000 Taxes CFAT $18,000 Year 0 1 2 3 4 5 $16,000 $16,000 $16,000 $16,000 $16,000 $10,000 $10,000 $10,000 $10,000 $10,000