In: Economics

Pollution control equipment for a pulverized coal cyclone furnace is estimated to cost $270,000, 2 years... Pollution control equipment for a pulverized coal cyclone furnace is estimated to cost$270,000, 2 years from now, an additional $120,000, 4 years from now and, an additional$100,000 5years from now At i=8 % per year,what is the equivalent annual worth of the cash flow series?

Solutions

Expert Solution

The present worth = 270,000(P/F, 8%, 2) + 120,000(P/F, 8%, 4) + 100,000(P/F, 8%, 5)

= 270,000(0.8573) + 120,000(0.7350) + 100,000(0.6806)

= 231,471 + 88,200 + 68,060

= 387,731

Equivalent annual worth = 387,731(A/P, 8%, 5)

= 387,731(0.2505)

= $97,126.62 Thus, the equivalent annual worth of the cash flow series is$97,126.62

Related Solutions

You expect that you will need to replace your furnace in 5 years at a cost of $16,447. How much must you save, each month for 14 months, starting next month (the same amount each month) if your savings account pays 2.27% APR (compounded monthly)? You expect that you will need to replace your furnace in 5 years at a cost... You expect that you will need to replace your furnace in 5 years at a cost of$15,729. How much must you save today in an account that pays 3.42% APR (compounded monthly) to exactly pay the $15,729 in 5 years? You expect that you will need to replace your furnace in 4 years at a cost... You expect that you will need to replace your furnace in 4 years at a cost of$15,682. How much must you save today in an account that pays 3.58% APR (compounded monthly) to exactly pay the $15,682 in 4 years? Depreciation by Three Methods; Partial Years Perdue Company purchased equipment on April 1 for$270,000. The...
Depreciation by Three Methods; Partial Years Perdue Company purchased equipment on April 1 for $270,000. The equipment was expected to have a useful life of three years or 18,000 operating hours, and a residual value of$9,000. The equipment was used for 7,500 hours during Year 1, 5,500 hours in Year 2, 4,000 hours in Year 3, and 1,000 hours in Year 4. Required: Determine the amount of depreciation expense for the years ended December 31, Year 1, Year 2,...
JLMB Company owns earth moving equipment that cost ?98,000. After 8 years, it will have estimated...
JLMB Company owns earth moving equipment that cost ?98,000. After 8 years, it will have estimated salvage value of ?18,000. Compute the depreciation charge for each of the first two years and the book value at the end of 4 years by each of the following three methods of depreciation: a. straight line method; b. sum-of-the-years digit method; and c. double declining balance method.