The capital investment for a new highway paving machine is $950000. This expense is estimated, in...

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The capital investment for a new highway paving machineis $950000. This expense is estimated, in year zero dollars, is$92600. This expense is estimated to increase at the rate of 5.7%per year. Assume that f=4.5%, N=7 years, MV at the end of the year7 is 10% of the capital investment, and the MARR (in real terms) is10.05% per year. What uniform annual revenue (before taxes), inactual dollars, would machine need to generate to breakeven?
f is the inflation rate

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Given cash flows are in nominal or actual terms while MARR is in real terms so either convert all cash flows to real or MARR to nominal We will convert MARR to nominal terms MARRnominal MARRreal inflation See Answer

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The capital investment for a new highway paving machineis $950000. This expense is estimated, in year zero dollars, is$92600. This expense is estimated to increase at the rate of 5.7%per year. Assume that f=4.5%, N=7 years, MV at the end of the year7 is 10% of the capital investment, and the MARR (in real terms) is10.05% per year. What uniform annual revenue (before taxes), inactual dollars, would machine need to generate to breakeven?f is the inflation rate