An asset is needed for a short amount of time (3years) it cost $250.000, but its

Question

An asset is needed for a short amount of time (3years) it cost $250.000, but its salvage value is dependent on on how much it is used over time. If the asset produces 10,000 parts per year, its salvage value is $100,000 at the end of the year 3, but if it produces 20,000 parts per year, its salvage value drops to $50,000, if it produces 30,000 parts per year, its salvage value falls to $10,000. If net revenues are $8 per part, what is the present worth of the three scenarios presented (based on usage), assuming that the MARR is 15%?

Explanation / Answer

Year 10,000/yr 20,000/yr 30,000/yr 0 -250000 -250000 -250000 1 80000 160000 240000 2 80000 160000 240000 3 180000 210000 250000 P. Worth ($1,590.37) $148,191.83 $304,549.19 NPV(0.15,B3:B5)+B2

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