Question
An investment vehicle purchased with cash for US$ 30000 today will be disposed of with a scrap value of $4000 at the end of its
An investment vehicle purchased with cash for US$ 30000 today will be disposed of with a scrap value of $4000 at the end of its 12-year useful life. Expenses related to the production of the vehicle in question; It is estimated that $2000 per year for the first 4 years, 6% more per year than the previous year for the following 4 years, and 5000 S per year for the remaining years. The expected annual revenues from production are; It is expected to be $7000 each year for the first two years, S$2000 more each year than the previous year for the next 5 years, and S$1000 less each year than the previous year in the following years. It is estimated that the annual average interest rate throughout the economic life will be 8% for the first 6 years and 10% each year for the remaining years. According to these data; a) Draw the cash flow diagram for the problem b) Calculate the present value, future value and annual value equivalents of the cash flow series. c) Examine the investment decision
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