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

a)asset produces 10,000 parts per year, its salvage value is $100,000 present worth = {(10000*8)(1/1.15 + 1/1.15^2 + 1/1.15^3) + 100,000/1.15^3 } - $250.000 = - $1590 b)produces 20,000 parts per year, present worth = {(20000*8)(1/1.15 + 1/1.15^2 + 1/1.15^3) + 10,000/1.15^3 } - $250.000 = $148,192 c)if it produces 30,000 parts per year, present worth = {(30000*8)(1/1.15 + 1/1.15^2 + 1/1.15^3) + 50,000/1.15^3 } - $250.000 =$304549 any doubts are welcmed please rate this ans as well....

Related Questions

Navigate

• Browse (All)
• Browse A
• Subjects

---

---

Integrity-first tutoring: explanations and feedback only — we do not complete graded work. Learn more.