Question

A project requires an invesment of 34,000 dollars. The project will project revenews of 6,000

dollars at the end of the next 15 years. At the end of the life of the project, the equipment can be
sold for a profit with salvage value of 14,000. The MARR is 5.25 percent. Compute the present
worth..

Answer 1

To calculate the present worth of the project, we need to consider the project revenue, salvage value, and the MARR. The present worth can be obtained by discounting the cash flows to their present values and summing them up.

Step-by-step explanation:

To calculate the present worth of the project, we need to consider the project revenue, salvage value, and the MARR (Minimum Attractive Rate of Return). The present worth can be obtained by discounting the cash flows to their present values and summing them up. Let's break it down:

1. Project revenue: $6,000 per year for 15 years
2. Salvage value: $14,000 at the end of the project's life
3. MARR: 5.25%

Using the formula for present value of an annuity and present value of a single amount, we can calculate the present worth of the project and determine if it is worth the investment.