Homework 2 Solution

# Homework 2 Solution - Homework 2 Solution 1. Draw the net...

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Homework 2 Solution 1. Draw the net cash flow diagrams for each of the following situations: a. The sum of \$100,000 is invested in a project at Time 0. Over the next 5 years, the project produces \$50,000 per year in revenues with \$2000 in expenses. b. A piece of equipment is purchased for \$25,000. Its annual operating and maintenance (O&M) costs are \$1000 in Year 1. The O&M costs increase by \$500 in each of the next four years. At the end of Year 5, the equipment is sold for scrap, generating \$2000 in revenue. c. Annual deposits totaling \$75,000 are made into an account for each of three years. One year later \$235,000 is withdrawn from the account. 0123 4 \$75,000 \$235,000 \$75,000 01234 \$25,000 5 \$1000 \$1000 \$2500 0 1234 \$100,000 5 \$48,000/yr

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2. Keisha borrows \$85,000 at an interest rate of 4.5% per year. The loan will be repaid as a lump sum at the end of 5 years. Create a table defining the amount of interest charged each year and the total
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## This note was uploaded on 12/07/2011 for the course CIVL 4111 taught by Professor Moore,l during the Fall '08 term at U. Memphis.

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Homework 2 Solution - Homework 2 Solution 1. Draw the net...

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