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23 September, 08:58

A project has the following cash flow. Year zero's cash flow is $10000. The following years' cash flows decrease by $2000 each year. At the end of the project's life time, the cash flow is $-10000. 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 = $10000 and the rest as a uniform gradient cash flow. The engineer analyzes the present worth of the project as P=A (P/A, i, a) (F/P, i, b) - G (P/G, i, c) (F/P, i, d). What should be the values for a, b, c, d, and G?

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  1. 23 September, 10:38
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    a=b=c=10

    G = 800

    Explanation:

    a, b, c show the time (number of years)

    G is the amount of increase in cash flow each year.
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