A company is about to invest in a joint venture research and development project with

another company. The project is expected to last eight years, but the company will

begin its yearly payments immediately $($i$.$e$.,$ a payment is made today, and the last

payment will be made eight years from today$).$ Salaries will account for $$40000$ of

each payment. The remainder will cover equipment costs and facility overhead. The

initial $($immediate$)$ equipment and facility cost is $$26000.$ Each subsequent year, this

figure will drop by $$3000$ until a cost of $$14000$ is reached, after which the costs will

remain constant until the end of the project.

a$.$ Draw a cash flow diagram to illustrate the cash flows for this situation.

b$.$ At an interest rate of $7$ percent, what is the total future worth of all project payments

at the end of the eight years?