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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
 Panzer

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