ENGINEERING ECONOMY DIGITAL ACCESS
ENGINEERING ECONOMY DIGITAL ACCESS
8th Edition
ISBN: 2810022611683
Author: Blank
Publisher: MCG
Question
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Chapter 3, Problem 45P

(a):

To determine

Calculate the value x.

(a):

Expert Solution
Check Mark

Explanation of Solution

The cash flow is given in Table 1 as follows:

Year12345678
CF2,0002,200X2x2,8003,0003,2003,400

.

The equivalent annual value (A) of the cash flow is $30,000. Interest rate (i) is 10%. The time period (n) is 8 years.

The missed value of x can be calculated as follows:

A=(CF1(1+i)1+CF2(1+i)2+CF3(1+i)3+CF4(1+i)4+CF5(1+i)5+CF6(1+i)6CF7(1+i)7+CF8(1+i)8)(i(1+i)n(1+i)n1)30,000=(2,000(1+0.1)1+2,200(1+0.1)2+x(1+0.1)3+2x(1+0.1)4+2,800(1+0.1)5+3,000(1+0.1)6+3,200(1+0.1)7+3,400(1+0.1)8)(0.1(1+0.1)8(1+0.1)81)30,000=(2,0001.1+2,2001.21+x1.331+2x1.4641+2,8001.6105+3,0001.7716+3,2001.9487+3,4002.1436)(0.1(2.14359)2.143591)30,000=(1,818.1818+1,818.1818+0.75131x+1.36603x+1,738.5905+1,693.3845+1,642.1204+1,586.1168)(0.214361.14359)30,000=(10,296.5758+2.1173x)(0.187478)30,0000.187444=(10,296.5758+2.1173x)

160,047.8009=(10,296.5758+2.1173x)2.1173x=160,047.800910,296.5758x=149,751.22512.1173=70,727.45

The value of x is $70,727.45.

(b):

To determine

Calculate the value of x through spreadsheet.

(b):

Expert Solution
Check Mark

Explanation of Solution

ENGINEERING ECONOMY DIGITAL ACCESS, Chapter 3, Problem 45P

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