1. For the following cash flow compute: Investment Annual operating Cost Annual Revenues Operating cost will increase by Arithmetic Gradient of G=$500 annually from the second year thru the 6th year Salvage Value at the end of 6 year Investment life n-6 years MARR= 10% $65,000 42,000 60,000 3,000 Hint for IRR use 20% a. Draw the cash-flow Diagram and compute PW,AW, FW b. IRR C. ERR

Intermediate Financial Management (MindTap Course List)
13th Edition
ISBN:9781337395083
Author:Eugene F. Brigham, Phillip R. Daves
Publisher:Eugene F. Brigham, Phillip R. Daves
Chapter13: Capital Budgeting: Estimating Cash Flows And Analyzing Risk
Section: Chapter Questions
Problem 2P
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1. For the following cash flow compute:
Investment
Annual operating Cost
Annual Revenues
Operating cost will increase by Arithmetic
Gradient of G-$500 annually from the second
year thru the 6th year
Salvage Value at the end of 6 year
Investment life n-6 years MARR= 10%
$65,000
42,000
60,000
3,000
Hint for IRR use 20%
Draw the cash-flow Diagram and compute PW,AW,FW
b. IRR
a.
C.
ERR
Transcribed Image Text:1. For the following cash flow compute: Investment Annual operating Cost Annual Revenues Operating cost will increase by Arithmetic Gradient of G-$500 annually from the second year thru the 6th year Salvage Value at the end of 6 year Investment life n-6 years MARR= 10% $65,000 42,000 60,000 3,000 Hint for IRR use 20% Draw the cash-flow Diagram and compute PW,AW,FW b. IRR a. C. ERR
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