Draw and solve the Cash Flow Diagram for Annual Value “A”. This is a 10 year Cash Flow, and interest rate is a compounded 7%).
a. $10,000.00 is Invested Today for a piece of testing equipment
b. $2000.00 is Earned as Annual Income from end of years 1-10 through use of this test equipment
c. $400.00 is the Annual Maintenance Cost of the testing equipment for years 2-10 (the first year is under warranty)
d. Salvage Value (amount you can sell the equipment at scrap value) at the end of the 10th year is $1500.00
e. There is an Arithmetic Gradient Income from years 1-10 with a Base Annuity of $500.00 and an Annual Gradient G of +$50.00
f. There is a one time payment (cost) for software upgrades in year 8 of $2500
g. There is a one time rebate (income) from the testing manufacturer in year 1 of $750
What is the Annual Value “A” of this Engineering Cash Flow Investment from Years 1-10?