Do not use any spread sheets you can solve any problem youd like. i rate all the

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Do not use any spread sheets you can solve any problem youd like. i rate all the time please show work

CHAP. 7] PW, FW, EUAS/EUAC 65 Calculate the present worth of the following cash flows, if the interest rate is 12% per year, compounded annually 7.24 End of Year Cash Flow, $1000 15 5 6 Ans. -$1786.86 A machine which costs $100 000 when new has a lifetime of 15 years and a salvage value equal to 20% of its original cost. Determine the capital recovery for this machine, if the interest rate is 10% per year. compounded annually. Ans. $12 517.60 per year 7.25 Repeat Problem 7.25, using a salvage value equal to 5% of the machine's original cost Ans. $12 989.56 per year 7.26 Determine the capital recovery for the machine in Problem 7.25, if the interest rate is 15% per year compounded annually, and total operating and maintenance costs are $2000 per year Ans. $16 681.60 per year 7.27 Determine the amount of money required to generate an infinite number of annual payments of $5000 each, if the interest rate is 10% per year, (a) compounded annually, (b) compounded continuously Ans. (a) S50 000; (b) $47 528.52 7.28 7.29 Mr. Diamond expects to invest $1000 per year for each of the next 20 years in an investment plan that pays 10% per year, compounded annually. At the end of the 20th year, he expects to withdraw the balance in his investment plan and deposit it in a savings account. This savings account pays 6% per year, compounded monthly. Mr. Diamond wants to withdraw a fixed amount from this savings account each month, for a total of five years. How large may this fixed amount be? Ans. $1107.13 Repeat Problem 7.7 for an interest rate of 15% per year, compounded annually Ans. $74.71 per year for 16 years 7.30 Costs of $10 000, $20 000, and $23 000 are incurred at the ends of three successive years. Find the EUAC for k repetitions of the cycle, if (a) 1-10% per year, (b) 1-15% per year, compounded annually Ans. (a) $17 250.55 per year for 3k years; (b) $21 322.10 per year for 3k years 7.31 A flood-control dam with a 100-year life has an initial cost of $15 million. The gates in the dam must be replaced every five years, at a cost of $2 million. If the interest rate is 8% per year, compounded annually, what is the capitalized equivalent of the annual cost of the dam? Ans. $4 261412 7.32 7.33 What is the total present worth of the dam described in Problem 7.32? Ans. S19 261412 Assuming that money earns 10% a year, which would be the better arrangement for leasing an electron microscope: (1) paying a deposit of $100 000, to be returned at the end of the lease period; or (2) paying $10 000 a year for as long as the device is kept? Ans. For (1), (26) gives EUAC = iP = (0.10)($100000)= $10000, and so the two plans are equivalent 734

Explanation / Answer

7.24

answer

PW=-15000+5000/1.12^1+6000/1.12^2+2000/1.12^3+4000/1.12^4

=-1786.86, there can be slight change beyond decimals due to rounding off

the above is the answer

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