A 10-year project is evaluated under two scenarios: (i)with inflation, and (ii)without inflation. Without inflation, and with a 10% interest rate, its present worth is $24 254. If annual inflation of 2% is assumed, then the project's present worth becomes 20% lower. It is also known that the project's first cost involves the purchase of a capital asset which depreciates at 13% and will be sold for salvage at the end of the project, there are no operating costs, and there is a fixed annual revenue. What is the project's first cost?

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The Answer of A 10-year project is evaluated under two scenarios: (i)with inflation, and (ii)without inflation. Without inflation, and with a 10% interest rate, its present worth is $24 254. If annual inflation of 2% is assumed, then the project's present worth becomes 20% lower. It is also known that the project's first cost involves the purchase of a capital asset which depreciates at 13% and will be sold for salvage at the end of the project, there are no operating costs, and there is a fixed annual revenue. What is the project's first cost?

A 10-Year Project Is Evaluated Under Two Scenarios: (I)with Inflation