Question

Asked Dec 11, 2019

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TransITRI is a transportation company with a recent need of a new construction equipment at a first cost of $78,000 (Equation (1)), zero salvage value, and a cash flow before taxes (CFBT) per year *t* that follows Equation (2).

CFBT = $30,000 – 3,000*t* (for *t* = 1, 2, … *T*) (1)

CFBT = - $78,000 (for *t* =0) (2)

Calculate the PW if the economic life of similar machinery is 8 years, while the MARR is 16%, 20%, and 24%

Step 1

Present worth can be calculated by taking the difference of present value of cash inflow and present value of cash outflow.

The below table shows the calculation of present worth at 16%:

Step 2

The resultant figures are shown below:

Step 3

The below table shows the calculati...

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