12. Find the value of A from the given cash flow diagram A. $400 B. $411 C. $480
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Question
12. Find the value of A from the given cash flow diagram A. $400 B. $411 C. $480 D. $500 Asy PROBLEMS Problem (20 pts) The Deadeye Distillery is opening a new production facility at Sweetwater Springs. Two types of stills are being considered and the following cost estimates have been developed Alternative MASHER SQUEEZ Data Life, Years First Cost Salvage Value S M&O; Cost M&O; Gradient $200 $15,000 $2,000 $1,000 $400 $10,000 $800 Determine which alternative should be selected. MARR-25%. (Partial Credit: Cash flow diagram, 20%; correct method and economic equations, 40%; correct answer 40%)Explanation / Answer
Solution 11:
Cash inflow after 5 years = $2,000
Annual investment from year 1 to year 4 is A
Now future value of annual investment of A at interest rate of 8% is equal to $2,000, it means
(A * Cumulative FV Factor for 4 periods at 8% interest rate) * (1.08) = $2,000
A * 4.506112 (1.08) = $2,000
A = $411
Hence option B is the right choice.
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