Homework Answers
Cost of machine = $96,000
Annual benefit = $16,000
Annual maintenance = $4,000
Useful life = 20 years
MARR = 8%
Calculate the NPW -
NPW = -Cost of machine - Annual maintenance(P/A, i, n) + Annual benefit(P/A, i, n)
NPW = -96,000 - 4,000(P/A, 8%, 20) + 16,000(P/A, 8%, 20)
NPW = -96,000 - (4,000 * 9.8181) + (16,000 * 9.8181)
NPW = -96,000 - 39,272.4 + 157,089.6
NPW = 21,817.2
So,
The NPW is closest to $21,816
Hence, the correct answer is the option (D).
Add Answer to:
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