Investment on an asset is expected to yield the following cash flow and the resale (salvage) value will be 10,000 dollars at the end of the 10th year. Investment on the asset is evenly split between present time, year 1, and year 2 (investment is equal at present time, year 1, and year 2 in terms of nominal (then-current) dollars). What is the present value of all three costs and the uniform period cost (a single value of C), considering the interest rate of 12% compounded annually? Please explain your work in detail. 

 

Transcribed Image Text:

C=? C=? C=? |=7500 |=7500 1=7500 I=7500 1=5500 |=5500 1=5500 1=5500 L=$10,000 2 3 4 7 8. 9 10 C: Cost, I: Income, L: Salvage Value 00 6. C=? C=? C=? |=7500 |=7500 1=7500 I=7500 1=5500 |=5500 1=5500 1=5500 L=$10,000 2 3 4 7 8. 9 10 C: Cost, I: Income, L: Salvage Value 00 6.