### Example of the using several Compound Interrest Functions in series

``` Problem: Find equivalent annual cost (expenditures).
a. Only purchase, maintenance and Salvage.
b. Total including Operations and Maintenance (O&M).
c. Total including inflationary effects on annual operations

First cost=100000;
useful life 11 years;
discount rate i=12%;
operating costs 7000 per year inflating at 4% annually;
maintence 5000 at years 3 6 9;
Salvage value at end of year 11= 40000.
Inflation rate 3% per year compounded.
```
1. Note the problem identification.

2. Begin by estimating the cash flow vector (treat Salvage or any revenue as negative cost):
a. without operating cost:,br> Cash Flow vector = 100000 0 0 5000 0 0 5000 0 0 5000 0 -40000
b. including operating cost of 7000 per year
Combined Cash flow = 10000 7000 7000 12000 7000 7000 12000 7000 7000 12000 7000 -33000

3. Find the inflated operating expenses beginning at 7000 and increasing at 3% per year.
c. Inflated Cash Flow =

4. Find the discounted (Net) Present Value of (a.), d =
5. Find the discounted (Net) Present Value of (b.), e =
6. Find the discounted (Net) Present Value of (c.), f =

7. Find the Equivalent Annual cost of d: answer a. =

8. Find the Equivalent Annual cost of e: answer b. =

9. Find the Equivalent Annual cost of f: answer c. =

End to date, ams 990714