Time Value of Money Formulas Present equivalent of a single cash flow of value F in the future P=F*((1/(1+i)^n) Present equivalent of a series of equal cash flows each with a value of A P=A*(((1 +i)^n)-1) (i*((l +i^n)) A company is considering the purchase of a new piece of testing equipment that is expected to produce $7,000 of income at the end of each of the next 7 years, je. $7000 at the end of year 1, $7000 at the end of year 2 and so on to the end of year 7.At the end of year 7 the testing equipment will be sold for $5000. a) Using an interest rate of 10% per year compounded annually, determine the Present equivalent of the annual $7000 income plus the Present equivalent of the $5000 income from the sale of the testing equipment Note: The present equivalent of the future income = present equivalent of the $7000 annuity + present equivalent of the $5000 from the sale of the equipment b) The new testing equipment will cost $35,000. Is purchase of the new testing equipment economically feasible