A project will require an initial outlay of 22 million, followed by investments of 10 million at the end of each of the first 6 years. The project is then anticipated to generate n annual cash inflows each in the amount of 14 million. These inflows will be paid at the end of the year, starting at the end of year 7. The cost of capital for the project is 8%. Find the value of n for which the project breaks even. (Note: You wil| likely not get an even number of years as your answer.)

A project will require an initial outlay of 22 million, followed by investments of 10 million at the end of each of the first 6 years. The project is then anticipated to generate n annual cash inflows each in the amount of 14 million. These inflows will be paid at the end of the year, starting at the end of year 7. The cost of capital for the project is 8%. Find the value of n for which the project breaks even. (Note: You wil| likely not get an even number of years as your answer.)

Cornerstones of Cost Management (Cornerstones Series)

4th Edition

ISBN:9781305970663

Author:Don R. Hansen, Maryanne M. Mowen

Publisher:Don R. Hansen, Maryanne M. Mowen

Chapter19: Capital Investment

Section: Chapter Questions

Problem 22E

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