Question

Calculate the equivalent annual cost in years 1 through 9 of the following series of disbursements. Use an interest rate of 10% per year.

10 9 8 7 6 5 4 3 2 1 Year

55 60 65 70 75 80 85 90 90 90 Cash flow

A. $ 424.49

B. $ 404.49

C. $ 434,49

D. $ 414.49

Answer 1

$NPV = 90/1.1 + 90/1.1^2 + 90/1.1^3 + 85/1.1^4 + 80/1.1^5 + 75/1.1^6 + 70/1.1^7 + 65/1.1^8 + 60/1.1^9 = 465.57.$