The announcement of the HAC cement factory states that the $200 million (M) investment is planned for 2012. Most large investment commitments are actually spread out over several years as the plant is constructed and production is initiated. Further investigation may determine, for example, that the $200 M is a present worth in the year 2012 of anticipated investments during the next 4 years (2013 through 2016). Assume the amount planned for 2013 is $100 M with constant decreases of $25 M each year thereafter. As before, assume the time value of money for investment capital is 10% per year to answer the following questions using tabulated factors and spreadsheet functions, as requested below.

In equivalent present worth values, does the planned decreasing investment series equal the announced $200 M in 2012? Use both tabulated factors and spreadsheet functions.

Given the planned investment series, what is the equivalent annual amount that will be invested from 2013 to 2016? Use both tabulated factors and spreadsheet functions.

Answer rating: 100% (QA)

The decreasing investment series has Cash flows at Year 2013 100 M at Year 2014 1002575 M at Year 20... View the full answer