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the presen;,_wonh‘of these costs over 5‘ years, using a nominal‘inferest it p nding. uw ID Number VEVSiopr C Blue I Problem 3. [12 marks] Ariel plans to deposit $5000 into an account earning 10% interest per year, each year for 8 years, starting one
year from now, to save for some travel. Ariel has decided that she wants to make one trip 12 years from now
that will require a $15,000 withdrawal then; she also wants to make 3 smaller trips that will require withdrawals
of X dollars each year for 3 years, in years 9, 10 and 11 from now. (a) Draw a rough cash flow diagram to represent the deposits and the withdrawals. “:1leth 15” " .«r
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(b) Calculate the value of X, the amount of each ofthe3withdr, ., ' tfactor symbols in your
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SD X s+i7/X¢ .. [01?5.7 : [8 ‘ “12M 2.1M ﬁlm/rm ZM“ UW ID Number slam W9 ‘ Problem 4. ‘ " A‘proposal to produce and sell a new gardening tool is under consideration. The first cost of equipment in the
factory would be $4 million now, the salvage value of the equipment would be 35 0.80 million in 10 years, the
annual operating costs would be $ 0.90 million in the first year, and the annual operating costs would increase _ by 2% per year each year compared to the previous year. It is expected that 0.7 million tools would be sold
each year for 10 years,‘at a price that starts at $20 per tool in the first year, and decreases by $0.50 per year
each year compared to the previous year. The MARR = 11% per year. Write an expression involving the above data, and interest factor symbols, that would give the overall present worth of the proposed investment. See page 1 for the list of allowed interest factor symbols. Do not evaluate 6
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the expression, as the arithmetic will just take a lot of time. 6 6; t ‘ ) 0‘ q
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 Winter '09
 BONKOO
 UW ID number

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