Homework Answers
We find that the ESL is 5 years because the EUAC is minimum in year 5
Note that AW is negative of EUAC so the answer for AW is -128,877
Using the present worth analysis, we find the Present value of cost and Present value of salvage value for all 5 years. This gives the present value of keeping the system for five years.
Using the PV we find the EUAC
| Year | Annual cost | Salvage value | PV of the annual cost | PV of the market value | Net present value | EUAC |
| 1 | 79000 | 46250 | 69298.25 | 40570.18 | 213728.07 | 243650.00 |
| 2 | 79000 | 46250 | 130086.18 | 35587.87 | 279498.31 | 169736.45 |
| 3 | 82000 | 46250 | 185433.84 | 31217.43 | 339216.41 | 146111.19 |
| 4 | 85000 | 46250 | 235760.67 | 27383.71 | 393376.96 | 135008.85 |
| 5 | 88000 | 46250 | 281465.11 | 24020.80 | 442444.31 | 128876.75 |
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AW value?
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