Question #230623
A peace of research equipment is expected to require an investment of 18000$ with 6000$ committed now and next year 7000$ while the remaining 6K$ will be paid out at the end of year 2. Annual operating costs for the system are expected to start in the first year and continue at 800$ per year. The life of the equipment is 8 years with a salvage value of 500$. Calculate the CR and AW. Values for the system, if the corporate MARR is 14.i ii% per year
1
Expert's answer
2021-08-29T16:52:58-0400

A piece of research equipment is expected to require an investment of $18,000, with $6,000 committed now and next year $7000 while the remaining $6K will be pay out at the end of year 2. Annual operating costs for the system are expected to start in the first year and continue at $800 per year. The life of the equipment is 8 years with a salvage value of $500. Calculate the CR and AW values for the system, if the corporate MARR is 14.32% per year.



Year wise cash flow are given

Present value =cf(1+i)n= \frac{cf }{ ( 1+i)^n}

For year 0 =6000(1+14.32%)0=6000= \frac{-6000}{ (1+14.32 \%)^0} = -6000

For year 1 =6000(1+14.32%)1=5248.42= \frac{-6000}{ (1+14.32 \%)^1}= -5248. 42

For year 2 =6000(1+14.32%)2=4590.99= \frac{-6000}{(1+14.32 \%)^2}= -4590. 99

For year 8 =500(1+14.32%)8=171.39= \frac{-500}{ (1+14.32 \%)^8}= 171.39

Capital recovery =60005248.424590.99+171.39= -6000-5248.42-4590.99+171.39

Capital recovery =15668.02= - 15668.02

Annual worth =15668.02800=16468.02= -15668.02- 800 = -16468.02


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