(a):
Calculate the sunk cost.
(a):
Explanation of Solution
Time period is denoted by n and the interest rate is denoted by i. Sunk cost can be calculated as follows.
Sunk cost is $9,000.
(b):
Calculate the
(b):
Explanation of Solution
Opportunity cost is equal to the market value of that particular year. Thus, opportunity cost is $2,000. Present worth (PW) can be calculated as follows.
Present worth is $24,832.
(c):
Calculate the present worth.
(c):
Explanation of Solution
Time period is denoted by n and the interest rate is denoted by i. Present worth (PW) can be calculated as follows.
Present worth is $18,562.
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Chapter 14 Solutions
Contemporary Engineering Economics (6th Edition)