Determine the FW of the following engineering project when the MARR is 14% per y

Question

Determine the FW of the following engineering project when the MARR is 14% per year. Is the project acceptable? Proposal A $10,000 6 years -$1,100 $7,500 $3,500 nvestment cost Expected life Market (salvage) value Annual receipts Annual expenses A negative market value means that there is a net cost to dispose of an asset. Click the icon to view the interest and annuity table for discrete compounding when the MARR is 14% per year. The FW of the following engineering project is sRound to the nearest dollar.)

Explanation / Answer

Calculate the Future Worth -

Future Worth = -Investment cost (F/P, 14%, 6) - Annual expenses (F/A, 14%, 6) + Annual receipts (F/A, 14%, 6) + Market (salvage) value

Future Worth = -$10,000(F/P, 14%, 6) - $3,500(F/A, 14%, 6) + $7,500(F/A, 14%, 6) - $1,100

Future Worth = (-$10,000 * 2.1950) - ($3,500 * 8.5355) + ($7,500 * 8.5355) - $1,100

Future Worth = -$21,950 - $29,874.25 + $64,016.25 - $1,100

Future Worth = $11,092

The future worth of the following engineering project is $11,092.

When future worth of a project is positive, it is acceptable.

So,

The project is acceptable.

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