INTEREST RATES AND CASH FLOWs 41 Year w NO 4 5 Cash Flow P=? 100 200 300 400 500 10. The School of Technology, Art, & Design (STAD) is considering buying a packaging machine for its Engineering Technology program. It is expected that this machine will generate revenue for the school through several projects and partnerships with local companies. The estimated net profit in the first year is $75,000 and is projected to decrease at the rate of $10,000 for the next five years after that. Profit then stays constant at $7,000 until the end of its time life (10 years). If the interest rate is 10%, determine the amount of money that the STAD can invest in this ma- chine. Assume there is no salvage value of the machine. 11. It is expected that the cost of maintaining a photovoltaic system is $500 in the first year, to increase by $50 per year through its time life of 25 years (e.g. $550 in year 2, $600 in year 3,...). Determine the present worth of these expenses, if i = 10% per year. 12. Determine the annual equivalency for the following cash flow table: Year Cash flow Year 0 0 Year 1 $ 200,000 Year 2 $ 180,000 Year 3 $ 160,000 Year 4 $ 140,000 Year 5 $ 120,000 Year 6 $ 100,000 Year 7 $ 80,000 Year 8 $ 60,000 13. An operations manager's salary is $200,000 per year. She expects to re- ceive a 5% raise annually. If the interest rate is 10% per year, determine the present worth of her salary over the next 10 years 14. Write one question/example to be added to this chapter