Roger is conducting a biochemical experiment for the next 12 months. In the first month, the...

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Finance

Roger is conducting a biochemical experiment for the next 12
months. In the first month, the expenses are estimated to be
$10,000. As the experiment progresses, the expenses areexpected
to increase by
2 percent each month. Roger plans to pay for the
experiment with a government
grant, which is received in four
monthly installments, starting a month after the experiment
completion date. Draw the cash flow diagram for thisexperiment.
Determine the amount of the monthly installment so that the
installments received are equal in value to the expensesincurred.
Annual nominal interest is 1
0 percent, compounded monthly.

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Monthly Interest Rate10120008333333Present Value PV of Cash FlowCash Flow1iNiDiscount RateMonthly interestNMonth of Cash FlowExpense in Month110000Expense in See Answer

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Transcribed Image Text

Roger is conducting a biochemical experiment for the next 12months. In the first month, the expenses are estimated to be$10,000. As the experiment progresses, the expenses areexpectedto increase by2 percent each month. Roger plans to pay for theexperiment with a governmentgrant, which is received in fourmonthly installments, starting a month after the experimentcompletion date. Draw the cash flow diagram for thisexperiment.Determine the amount of the monthly installment so that theinstallments received are equal in value to the expensesincurred.Annual nominal interest is 10 percent, compounded monthly.