What is the present value dollars for all cash flows

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Reference no: EM13935156

A manufacturing company invests $100,000 in a new piece of equipment. Operating expenses for this new piece of equipment is estimated to be $4,000 starting EOY 1 and increasing by $200 per year at the EOY2 and for the next 9 additional years. Additional revenues after placing this piece of equipment in service are projected to be $10,000 the first year EOY1 and remaining constant for 4 additional years. After that, additional revenue is expected to increase to $25,000 at EOY6 snf increase at the rate of $300 per year from EOY7 through EOY10. At the end of 10 years the piece of equipment will be sold for $10,000. The nominal rate of interest for all years is 12%. a) Draw a cash flow diagram from the company's perspective. b) What is the present value dollars for all cash flows? (Move all dollars to (time=0) c)What is the uniform series of cash flows for years 1 through 10 that is equivalent to all the cash flows over the ten year period?

Reference no: EM13935156

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