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Show all work for each step 1. (40) A ten-year project requires an initial investment of $200,000. Each year it generates $50,000 in sales revenues,

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1. (40) A ten-year project requires an initial investment of $200,000. Each year it generates $50,000 in sales revenues, with costs of $10,000 per year. In years four and eight a maintenance overhaul costing $6000 must be performed. At the end of year 10, the equipment will be sold for salvage for $20,000. a.(20) Draw two cash flow diagrams, one showing all the costs and revenues (using stacked arrows as seen below) and the other a net cash flow diagram, with one value per time instant. 1. b.(10) Write an expression for the present worth, in terms of the factors such as (P/A, i%,n) and (P/F,i%,k). Your expression must include at least one use of (P/A,i%, n). c. (5) Evaluate the present worth, if the interest rate is 10%. d. (5) If someone offered you $40,000 cash not to do this project, what would you do? Explain your answer using your analysis. Assume risk has already been factored in (you can ignore it)

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