Q- A new street seeping equipment can be purchased for $ 75000. Its expected useful life...
Q- A new street seeping equipment can be purchased for $ 75000. Its expected useful life is eight years, at which time its market value will be zero.
Annual receipts less expenses will approximately $ 20000 per year over eight year study period. Use the PW method and MARR of %15 to determine whether this is good investment ?
Use hand calculations to solve it!
Homework Answers
Under the PW method we have
PW = initial cost + annual benefits (net) (P/A, i%, n)
We then have
PW = -75000 + 20000(P/A, 15%, 8)
PW = -75000 + 20000 * (1.15^8-1) / (0.15*1.15^8)
= $14,746.43
Hence, the PW is $14,746.43
PW is positive so this is a good investment
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