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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,
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, 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)Step by Step Solution
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