Your company is buying a new p

Your company is buying a new piece of equipment to reduce emissions in your factory. It will cost $1,200 to run next year (Year 1), and that operating cost will increase by 5% every year until Year 20, at which point you will discard it (after paying the operating cost – there is a cash flow in Year 20). You will also have to pay to maintain the equipment, which you estimate will cost $500 next year (Year 1) and increase by 4% per year until Year 20. Assume an interest rate of 8%.

– What is the equivalent present value in Year 0 of the total costs of the equipment?

– What is the equivalent future value in Year 20 of the total costs of the equipment?
– What is the equivalent present value in Year of the total costs of the equipment? $(Round to the nearest dollar)
– What is the equivalent future value in Year 20 of the total costs of the equipment? (Round to the nearest dollar)

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