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The Settle & Souper Company is undertaking a large, long-term project. In order to accomplish the project, the company has taken out a loan of $62425 at an interest rate of 2%, compounded annually. This loan will allow the company to make some necessary upgrades. The company will make a loan payment at the end of each year for 6 years.

The annual revenue will be $501142, increasing by 19% each year. Annual costs are estimated to be $240975, increasing by 7% each year. Settle & Souper will receive a large bonus payment of $801537 at the end of the project. The project has a lifespan of 11 years.

Settle & Souper use a MARR of 7%. What is the equivalent uniform annual worth (EUAW) of this project?

Hint: The loan interest is different from the MARR. How should this be treated in the problem?

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Financial Management, Finance

Category:- Financial Management
Reference No.:- M92424616

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