FINANCIAL FORECASTING

Problem Statement

You are working on a team of high$-$priced consultants, designing a renewable energy system for a client. Your proprietary equipment will be installed at the client's location. As part of the design, the client wants a $20$year projection of finances, sometimes called a pro$-$forma analysis.

Revenue projections have been made by your financial team, but as the engineer it is your job to determine how often the machinery you install should get replaced.

You know that:

The machinery you are installing has a $7-$year lifespan.

If you change the machinery out before its lifespan is over, it can be sold for a portion of its initial value. The machine loses $20\%$ of its value each year.

The machinery will also require regular maintenance.

The older the equipment, the more time$/$money is spent on maintenance.

You can assume the CostToMaintain $=$$$30,000**(1\mathrm{.}05{)}^{\text{E}\text{q}\text{u}\text{i}\text{p}\text{A}\text{g}\text{e}}$ or research your own equation

If each year we have a binary $($change$/$don$\text{'}$t change$)$ decision to make for $20$ years, that means there are $2^{{?}^{{?}^{?}}}20$ different ways to solve this problem, so it will be easiest to solve it with an automated program such as Excel Solver.

Also discuss in your group if other costs should be factored in$.$