An industrial firefighting truck costs $100,000. Savings in insurance premiums and uninsured losses from the acquisition and operation of this equipment is estimated at $60,000/yr. Salvage value of the apparatus after 5 yrs. is expected to be $20,000. A full-time driver during operating hours will accrue an added cost of $10,000/yr. @ 40% present worth @ 50% present worth

ENGR.ECONOMIC ANALYSIS
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Chapter1: Making Economics Decisions
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What would be the annual worth on this investment?
An industrial firefighting truck costs $100,000. Savings in insurance premiums and uninsured
losses from the acquisition and operation of this equipment is estimated at $60,000/yr. Salvage
value of the apparatus after 5 yrs. is expected to be $20,000. A full-time driver during operating
hours will accrue an added cost of $10,000/yr.
@ 40% present worth
@ 50% present worth
Transcribed Image Text:An industrial firefighting truck costs $100,000. Savings in insurance premiums and uninsured losses from the acquisition and operation of this equipment is estimated at $60,000/yr. Salvage value of the apparatus after 5 yrs. is expected to be $20,000. A full-time driver during operating hours will accrue an added cost of $10,000/yr. @ 40% present worth @ 50% present worth
Expert Solution
Step 1

Given intial cost = 100000 $

Annual savings = 60000 $

Salvage value = 20000$

Annual expense = 10000 $

Present worth = Net cashflow each year / (1 + rate)^time

Now total the Net Present value by adding all the present worth of cashflows.

 

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