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 – 3,000t (for t = 1, 2, … T)                                       (1)                                             CFBT = - $78,000 (for t =0)                                                                  (2)   Calculate the PW if the economic life of similar machinery is 9 years, while the MARR is 16%

Principles of Accounting Volume 2
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Chapter11: Capital Budgeting Decisions
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Problem 20EB: Taos Productions bought a piece of equipment for $79,860 that will last for 5 years. The equipment...
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  1. 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 – 3,000t (for t = 1, 2, … T)                                       (1)

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

 

Calculate the PW if the economic life of similar machinery is 9 years, while the MARR is 16%

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