With an interest rate of 10% per year and given the following estimates, the annual worth of alternative ''F'' is closest to?
B. $36,100 ALTERNATIVE ''F''
D. $43,500 First cost, $ -200,000
Annual cost, $/year -50,000
Annual Revenuue, $/year 120,000
Salvage Value, $ 25,000
Life, years 10
In order to find the annual worth, we first need to find the Present Worth (PW) of the alternative F. The net annual income is 120,000-50,000 = 70,000. The PW of this can be ...
The solution explains how to calculate the present worth and annual worth
Calculating the Equivalent Annual Worth
A rural utility company provides standby power to pumping stations using diesel-powered generators. An alternative has arisen whereby the utility could use a combination of wind and solar power to run its generators, but it will be a few years before the alternative energy systems are available. The utility estimates that the new systems will result in savings of $15,000 per year for 3 years, starting 2 years from now, and $25,000 per years for 4 more years after that. At an interest rate of 8% per year, what is the equivalent annual worth (years 1-8) of the projected savings?View Full Posting Details