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A plant purchased a chemical process system for $14,404, where its operating cost per year is 53,701 for the first 6 years, t
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Answer #1

Here,

Initial Cost = $14404

Operating Cost for 1st 6 years = $3701

Growth from year 7 in operating cost = 9%

Interest rate = 14%

So The cash flow and future value

Value A (1+A)^(n) Future Value
Year 0 14404 14% 6.261349104 90188.47249
Year 1 3701 14% 5.492411495 20327.41494
Year 2 3701 14% 4.81790482 17831.06574
Year 3 3701 14% 4.226232298 15641.28574
Year 4 3701 14% 3.707221314 13720.42608
Year 5 3701 14% 3.251948521 12035.46148
Year 6 3701 14% 2.852586422 10557.42235
Year 7 4034.1 14% 2.502268791 10094.37751
Year 8 4397.2 14% 2.194972624 9651.641653
Year 9 4792.9 14% 1.925414582 9228.324036
Year 10 5224.3 14% 1.68896016 8823.572982
Year 11 5694.4 14% 1.481544 8436.574167
Year 12 6206.9 14% 1.2996 8066.548984
Year 13 6765.6 14% 1.14 7712.752976
Year 14 7374.5 14% 1 7374.474337
SUM 249689.8155

n = number of years left

For example for period 0, n = 14

i.e (1+.14)^14 = 6.2613

And Future Value = Value * (1+.A)^n

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