Capital investment $120,000 (certain, pr. = 1.0) Annual revenues $140,000 with pr. 0.6, or $135,000 with pr. 0.4 $60,000 with pr. 0.6, or $50,000 with pr. 0.4 $40,000 with pr. 0.5, or $35,000 with pr. 0.5 Annual expenses Salvage value

ENGR.ECONOMIC ANALYSIS
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Chapter1: Making Economics Decisions
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A new snow making machine utilizes technology that permits snow to be produced in ambient temperature of 70 degrees Fahrenheit or below. The estimated cash flows for the ski resort contemplating this investment areuncertain as shown below (note: pr. = probability). The machine is expected to have a useful life of 12 years, and the MARR of the ski resort is 8% per year. What is the expected present worth of this investment?

Capital investment $120,000 (certain, pr. = 1.0)
Annual revenues
$140,000 with pr. 0.6, or $135,000
with pr. 0.4
$60,000 with pr. 0.6, or $50,000
with pr. 0.4
$40,000 with pr. 0.5, or $35,000
with pr. 0.5
Annual expenses
Salvage value
Transcribed Image Text:Capital investment $120,000 (certain, pr. = 1.0) Annual revenues $140,000 with pr. 0.6, or $135,000 with pr. 0.4 $60,000 with pr. 0.6, or $50,000 with pr. 0.4 $40,000 with pr. 0.5, or $35,000 with pr. 0.5 Annual expenses Salvage value
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