What is the capitalized worth per year starting in year one

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1) In a proper comparison of alternatives 1 and 2, with an MARR of 10%, what would be the present worth of alternative 1?

End of year Alternative 1 Alternative 2
0 -$40,000 -$50,000
1 $12,000 $10,000
2 $12,000 $10,000
3 $12,000 $10,000
4 $36,000 $10,000
5 $10,000
6 $10,000
7 $10,000
8 $50,000

 

2) what is the capitalized worth, at i=10%, of $1,500 per year starting in year one and continuing forever, and $10,000 in year five, repeating every four years thereafter, and continuing ad infinitum (i.e. forever )?

3) The exploration for oil on the continental shelf by a small, independent drilling company will produce the following cash flow: a $520,000 investment now, $200,000 in annual income in years 1 through 10, and a $1,500,000 dismantling cost at end-of-year 10. If the company's reinvestment rate of 20%, than what would be the company's external rate of return on this project?

Reference no: EM13241456

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