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please help thanks! Section II. Problem Solving. SHOW YOUR WORK FOR CREDIT ( 60 points total) 2.1[20 points]. Given the cash flows in table below.
please help thanks!
Section II. Problem Solving. SHOW YOUR WORK FOR CREDIT ( 60 points total) 2.1[20 points]. Given the cash flows in table below. Determine the value of P,i=10% per year. Show all your work for credit Hints: - If you decide to solve as linear gradient series, use (P/G,i,n) formula below where G is the linear increment, just figure out what is G. Notice G increment starts in year 2, see figure above; Formula will only give you the increasing component to present, you still need to add the fixed payment series (P/A,i,n). You can use the attached interest lable to verify both (P/G,i,n) and (P/A,i,n) calculations. The sum of both is your answer to b) below. - If this sounds complicated, just do (P/F,i,n) for each of the 4 flows separately. a) [3 points] Draw a cashflow for the project. b) [7 points] Determine the value of P, the net present worth at i=10%. c) [10 points] Consider the case in which P is the initial investment, and instead of the value found in b) above, P is $3,200, is this a worthwhile project if evaluated at a 10% rate? Include a revised cash flow in your response. Explain why or why not. d) [Extra 3 points]. Would your response to c) change if the interest rate is 5% ? Explain your response, talking about the impact of the interest rate on net present value Step by Step Solution
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