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Your company is buying a new piece of equipment to reduce emissions in your factory. It will cost $8,000 to run next year (Year 1),
Your company is buying a new piece of equipment to reduce emissions in your factory. It will cost $8,000 to run next year (Year 1), and that operating cost will increase by 6% every year until Year 20, at which point you will discard it (after paying the operating cost- there is a cash flow in Year 20). You will also have to pay to maintain the equipment, which you estimate will cost $6.400 next year (Year 1) and increase by 7% per year until Year 20. Assume an interest rate of 5%. a. What is the equivalent present value in Year 0 of the total costs of the equipment? b. What is the equivalent future value in Year 20 of the total costs of the equipment? a. What is the equivalent present value in Year 0 of the total costs of the equipment? $ (Round to the nearest dollar) b. What is the equivalent future value in Year 20 of the total costs of the equipment? $ (Round to the nearest dollar)
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