A project has the following cash flow. Year zero\'s cash flow is -$4000. The fol

Question

A project has the following cash flow. Year zero's cash flow is -$4000. The following years' cash flows increase by $800 each year. At the end of the project's life time, the cash flow is $4000. The engineer who's evaluating this project disaggregate the cash flow by breaking it down to an annuity starting from year 0 to 10 with A $4000 and the rest as a uniform gradient cash flow. The engineer analyzes the present worth of the project as P-A(P/Ai.a)F/Pi,1)+G(P/G.i.b F/Pi.c). What should be the values for a ,and G 6 789 10

Explanation / Answer

You Can get factor formulas from here:https://www.me.utexas.edu/~me353/lessons/S2_Evaluation/L02_Equivalence/factor_formulas.html

As you can see here, A= -4000 and G= 800
a=10,b=10, c= 1

Also you Can check the following website for further reference

http://global.oup.com/us/companion.websites/9780190296902/sr/interactive/formulas/arithmetic/

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