Morris Glass Company has decided to invest funds for the next 5 years so that development of “smart” glass is well funded in the future. This type of new-technology glass uses electrochrome coating to allow rapid adjustment to sun and dark in building glass, as well as assisting with internal heating and cooling cost reduction. The financial plan is to invest first, allow appreciation to occur, and then use the available funds in the future. All cash flow estimates are in $1000 units, and the interest rate expectation is 8% per year. Years 1 through 5 (investment): Invest $7000 in year 1, decreasing by $1000 per year through year 5. Years 6 through 10: No new investment and no withdrawals. Years 11 through 15(withdrawal): Withdraw $20,000 in year 11, decreasing 20% per year through year 15. Determine if the anticipated withdrawals will be covered by the investment and appreciation plans. Use Present worth method.
A loan of $10,000 is to be repaid over a period of eight years. During the first four years, exactly half of the loan principal is to be repaid (along with accumulated compound interest) by a uniform series of payments of A1 dollar per year. The other half of the loan principal is to be repaid over four years, with accumulated interest, by a uniform series of payments of A2 dollar per year, If i=9% per year, what are A1 and A2?
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