Contemporary Engineering Economics 6th Edition by Chan Park

Exercise 53

The Solar Energy Company is producing electricity directly from a solar source by using a large array of solar cells and selling the power to the local utility company. Because these cells degrade over time, thereby resulting in lower conversion efficiency and power output, the cells must be replaced every four years, which results in a particular cash flow pattern that repeats itself as follows: n = 0, $600,000; n = 1, $400,000; n = 2, $300,000; n = 3, $200,000; and n = 4, $100,000. Determine the annual equivalent cash flows at i = 10%.