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Determine the equal , end of period , annual worth of a process which will involve...

Determine the equal , end of period , annual worth of a process which will involve an initial outlay of $80000 followed by costs of $12000 at the end of year1 and amounts increasing by $1200 per year through its 12 year life. Assume that the interest rate is 10% per year.

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Expert Solution

Year Outflow $ PV Factor @10% Present Value $
0      80,000                             1              80,000
1      12,000                0.90909              10,909
2      13,200                0.82645              10,909
3      14,400                0.75131              10,819
4      15,600                0.68301              10,655
5      16,800                0.62092              10,431
6      18,000                0.56447              10,161
7      19,200                0.51316                9,853
8      20,400                0.46651                9,517
9      21,600                0.42410                9,161
10      22,800                0.38554                8,790
11      24,000                0.35049                8,412
12      25,200                0.31863                8,029
Total 303,200          197,646
Equivalent Annual Worth $ 29,007 (197,646 / 6.81369 )

ekkarill92 answered 1 year ago
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