Nippon Steel's expenses for heating and cooling a large manufacturing facility are expected to increase according to an arithmetic gradient beginning in year 2. If the cost is $550,000 this year (year 0) and will be $550,000 again in year 1, but then it is estimated to increase by $45,000 each year through year 12, what is the equivalent annual worth in years 1 to 12 of these energy costs at an interest rate of 11% per year? The equivalent annual worth is determined to be $

Nippon Steel's expenses for heating and cooling a large manufacturing facility are expected to increase according to an arithmetic gradient beginning in year 2. If the cost is $550,000 this year (year 0) and will be $550,000 again in year 1, but then it is estimated to increase by $45,000 each year through year 12, what is the equivalent annual worth in years 1 to 12 of these energy costs at an interest rate of 11% per year? The equivalent annual worth is determined to be $

Practical Management Science

6th Edition

ISBN:9781337406659

Author:WINSTON, Wayne L.

Publisher:WINSTON, Wayne L.

Chapter9: Decision Making Under Uncertainty

Section: Chapter Questions

Problem 46P

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Computation of Present Worth
Year	Cash Flow ($)	PV Factor @11%	Discounted Cash Flows ($)
	(A)	(B)	(A) x (B)
0	550,000	1.0000	550,000
1	550,000	0.9009	495,495
2	595,000	0.8116	482,902
3	640,000	0.7312	467,968
4	685,000	0.6587	451,210
5	730,000	0.5935	433,255
6	775,000	0.5346	414,315
7	820,000	0.4817	394,994
8	865,000	0.4339	375,324
9	910,000	0.3909	355,719
10	955,000	0.3522	336,351
11	1,000,000	0.3173	317,300
12	1,045,000	0.2858	298,661
		PW ($) =	5,373,494