Question
Question 1 It is currently year 0. Your MARR is 5% a year. A project has the following costs and income. (Costs are negative cash
Question 1
It is currently year 0. Your MARR is 5% a year. A project has the following costs and income. (Costs are negative cash flows, income is a positive cash flow. If in a given year the project has cost of $5 and income of $7, the net cash flow is $7 - $5 = $2.)
Costs: The project incurs costs every year from Year 1 to Year 10. Costs are $50 in Year 1, after which they go up by $50 a year, so they are $100 in Year 2, $150 in Year 3, etc.
Income: The project produces income every year from Year 1 to Year 10. Income is $200 in Year 1, after which it goes up by 10% a year, so income is $220 in Year 2, $242 in Year 3, etc.
What is the Present (Year 0) Worth of the project?
Question 2
It is currently year 0. Your MARR is 10% a year. A project has the following costs and income. (Costs are negative cash flows, income is a positive cash flow. If in a given year the project has cost of $5 and income of $7, the net cash flow is $7 - $5 = $2.)
Costs: The project incurs costs every year from Year 1 to Year 10. Costs are $64 in Year 1, after which they go up by 5% a year, so costs are $67.20 in Year 2, $70.56 in Year 3, etc.
Income: The project produces income every year from Year 2 to Year 10. Income is $25 in Year 1, after which it goes up by $25 a year, so it is $50 in Year 2, $75 in Year 3, etc.
What is the present value of this project?
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