Calculate the present worth of all costs for a newly acquired machine with an in
ID: 1148716 • Letter: C
Question
Calculate the present worth of all costs for a newly acquired machine with an initial cost of $29,000, no trade-in value, a life of 10 years, and an annual operating cost of $13,000 for the first 4 years, increasing by 10% per year thereafter. Use the interest rate of 10% per year.
Calculate the present worth of all costs for a newly acquired machine with an initial cost of $29,000, no trade-in value, a life of 10 years, and an annual operating cost of $13,000 for the first 4 years, increasing by 10% per year thereafter. Use the interest rate of 10% per year.
Explanation / Answer
Present Worth of costs is computed as follows.
Year Cash Flow ($) PV Factor @10% Discounted Cash Flow ($) (A) (B) (A) x (B) 0 29,000 1.0000 29,000 1 13,000 0.9091 11,818 2 13,000 0.8264 10,744 3 13,000 0.7513 9,767 4 13,000 0.6830 8,879 5 14,300 0.6209 8,879 6 15,730 0.5645 8,879 7 17,303 0.5132 8,879 8 19,033 0.4665 8,879 9 20,937 0.4241 8,879 10 23,030 0.3855 8,879 PW ($) = 123,483Related Questions
drjack9650@gmail.com
Navigate
Integrity-first tutoring: explanations and feedback only — we do not complete graded work. Learn more.