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Module 10 - Example TVM Problems

The document discusses a sample problem and quiz question about TVM. The sample problem asks if it is worthwhile to purchase industrial equipment that costs $200,000 but saves $35,000 per year for 10 years at an interest rate of 12%. The quiz question asks how much one would be willing to pay for a property worth $300,000 in 10 years assuming a worth of money of 8%.

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Bob Hope
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92 views

Module 10 - Example TVM Problems

The document discusses a sample problem and quiz question about TVM. The sample problem asks if it is worthwhile to purchase industrial equipment that costs $200,000 but saves $35,000 per year for 10 years at an interest rate of 12%. The quiz question asks how much one would be willing to pay for a property worth $300,000 in 10 years assuming a worth of money of 8%.

Uploaded by

Bob Hope
Copyright
© © All Rights Reserved
Available Formats
Download as PPTX, PDF, TXT or read online on Scribd
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TVM Problem and

Quiz
Module 10
Chapter 3
Contemporary Engineering Economics
Copyright 2010

Contemporary Engineering Economics, 5th edition, 2010

Sample Problem

Problem 3.36: You are considering buying a piece

of industrial equipment to automate a part f your


production process. This automation will save labor
costs by as much as $35,000 per year over 10 years.
The equipment costs $200,000. Should you
purchase the equipment if your interest rate is
12%?

Contemporary Engineering Economics, 5th edition, 2010

Quiz Question

You are interested in buying a piece of real

property that could be worth $300,000 in year 10


years. Assuming that your money is worth 8%, how
much would you be willing to pay for the property?
Show the cash flow diagram, cash flow notation and
answer.

Contemporary Engineering Economics, 5th edition, 2010

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