Margaret has a project with a £ 26,000 first cost that returns £ 4,800 per year...

Margaret has a project with a £ 26,000 first cost that returns £ 4,800 per year over its 10-year life. It has salvage value of £ 3,400 at the end of 10 years. If the MARR is 14 %, (Use 5 significant figures for your calculations, and round your answers to the nearest dollar. Indicate losses as a negative value.)

(a) What is the present worth of this project?

(b) What is the annual worth of this project?

(c) What is the future worth of this project after 10 years?

Expert Solution

a) Present Worth = -26,000 + 4,800(P/A, 14%, 10) + 3,400(P/F, 14%, 10)

= -26,000 + 4,800(5.216) + 3,400(0.2697)

= -26,000 + 25,036.8 + 916.98

= -$46

b) Annual Worth = -26,000(A/P, 14%, 10) + 4,800 + 3,400(A/F, 14%, 10)

= -26,000(0.1917) + 4,800 + 3,400(0.0517)

= -4,984.2+ 4,800 + 175.78

= -$8

c) Future Worth = -26,000(F/P, 14%, 10) + 4,800(F/A, 14%, 10) + 3,400

= -26,000(3.707) + 4,800(19.337) + 3,400

= -96,382 + 92,817.6 + 3,400

= -$164

Rahul Sunny answered 1 year ago

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