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Unformatted text preview: Solve for i by trial and error or Excel i = 14.3% (Excel) i > MARR; select alternative N 8. Here we have a geometric gradient series with base amount 8500 and gradient -500 to deal with. Why ? Because the first benefit at the end of year 1 is 9000 – 500(1) = 8500 After that the payments decrease by 500 in each year so the gradient is -500. Recall that we can decompose such as series into an annuity with payment 8500 and geometric gradient series with base amount zero and gradient -500. So we know immediately that 8500 is one number part of the AW of the project. Another part is the annual worth of the latter geometric series which is -500(A/G,i, 10). Finally, the annual worth of remaining amount of -40,000 is -40,000(A/P,i,10). Therefore we have: 0 = -40,000(A/P,i,10) + 8500 – 500(A/G,i,10) Solve for i by trial and error i = 10.5% is < MARR = 17% Select Z1...
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This note was uploaded on 09/24/2011 for the course CPS 125 taught by Professor Panzer during the Winter '11 term at Ryerson.
- Winter '11