Homework Answers
Time is 15 periods, interest rate is 13%, initial cost is 46500 and annual saving is 11530.
Salvage value is 8225.
Find the EUAW as:
EUAW = -46500(A/P, 13%, 15) + 11530 + 8225(A/F, 13%, 15)
= -46500 * (0.13*1.13^15)/(1.13^15 - 1) + 11530 + 8225 * 0.13/(1.13^15 - 1)
= $4538
This is the required value which is positive implying that the equipment purchase was desirable.
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