In: Accounting
If a solar panel system has an increasing annual maintenance cost (an arithmetic gradient) of $500 per year over an 8 year period, then what is the present value based on 10% interest?
If a solar panel system has an increasing annual maintenance cost (an arithmetic gradient) of $500 per year over an 8 year period THAT STARTS AT YEAR 4, then what is the present value based on 10% interest? To be clear: the total period is 12 years with an 8 year gradient starting in year 4.
If we add an $800 uniform annual payment to the solar panel system of problem #2 (for all 12 years), what is the new total present value? To be clear: this answer depends on a correct answer to problem #2 (where you moved a gradient), which depends on a correct answer to problem #1 (where you calculated a gradient).
1) | Annual Cash flow | 500 | |
PVA Factor For (8 year,10%) | 5.3349262 | ||
Present Value | $ 2,667.46 | ||
2) | |||
Year | Cash Flow | PV Factor | PV of Cash Flow |
1 | 500 | 0.9090909 | $ 454.55 |
2 | 500 | 0.8264463 | $ 413.22 |
3 | 500 | 0.7513148 | $ 375.66 |
4 | 1000 | 0.6830135 | $ 683.01 |
5 | 1500 | 0.6209213 | $ 931.38 |
6 | 2000 | 0.5644739 | $ 1,128.95 |
7 | 2500 | 0.5131581 | $ 1,282.90 |
8 | 3000 | 0.4665074 | $ 1,399.52 |
9 | 3500 | 0.4240976 | $ 1,484.34 |
10 | 4000 | 0.3855433 | $ 1,542.17 |
11 | 4500 | 0.3504939 | $ 1,577.22 |
12 | 4500 | 0.3186308 | $ 1,433.84 |
Present Vlaue | $ 12,706.76 | ||
3) | |||
Year | Cash Flow | PV Factor | PV of Cash Flow |
1 | 1300 | 0.9090909 | $ 1,181.82 |
2 | 1300 | 0.8264463 | $ 1,074.38 |
3 | 1300 | 0.7513148 | $ 976.71 |
4 | 1800 | 0.6830135 | $ 1,229.42 |
5 | 2300 | 0.6209213 | $ 1,428.12 |
6 | 2800 | 0.5644739 | $ 1,580.53 |
7 | 3300 | 0.5131581 | $ 1,693.42 |
8 | 3800 | 0.4665074 | $ 1,772.73 |
9 | 4300 | 0.4240976 | $ 1,823.62 |
10 | 4800 | 0.3855433 | $ 1,850.61 |
11 | 5300 | 0.3504939 | $ 1,857.62 |
12 | 5300 | 0.3186308 | $ 1,688.74 |
Present Value | $ 18,157.72 | ||
Let me know, if answer wrong. I can correct it. |